Behavioral Finance and the Imperative to Rethink Market Efficiency
According to traditional finance, investors with rational behaviors examine risk and return before making a decision to obtain maximum profit. However, the exploration of the behavioral path results in deciphering the emotions of participants in the financial markets. The purpose of this work is to...
Saved in:
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Academic Research and Publishing UG
2023-12-01
|
| Series: | Financial Markets, Institutions and Risks |
| Subjects: | |
| Online Access: | https://armgpublishing.com/wp-content/uploads/2024/01/FMIR_4_2023_4.pdf |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1849739334434947072 |
|---|---|
| author | Miloudi Kobiyh Adil El Amri Salah Oulfarsi Yassine Hilmi |
| author_facet | Miloudi Kobiyh Adil El Amri Salah Oulfarsi Yassine Hilmi |
| author_sort | Miloudi Kobiyh |
| collection | DOAJ |
| description | According to traditional finance, investors with rational behaviors examine risk and return before making a decision to obtain maximum profit. However, the exploration of the behavioral path results in deciphering the emotions of participants in the financial markets. The purpose of this work is to examine the role of the psychological theory. The aim is to see how the psychological attractions of actors have been able to acquire a central place in finance, giving rise to behavioral finance, which allows a deeper understanding of investment in the financial markets. This finance is not just a simple presentation of behavioral biases, it aims to use results from cognitive psychology to explain behavioral finance and the imperative to rethink market efficiency. Behavioral biases challenge informational efficiency and can be reflected in prices. Thus, it is a question in this work of explaining behavioral of analyzing how the limit of the efficiency of the financial markets marks the starting point of this approach. This is to highlight its main contribution, which improves decision-making process, and study the factors allowing its integration into the field of finance as an alternative model. |
| format | Article |
| id | doaj-art-cdbe65eb3ed042b48f0a09fa4e24ceb9 |
| institution | DOAJ |
| issn | 2521-1250 2521-1242 |
| language | English |
| publishDate | 2023-12-01 |
| publisher | Academic Research and Publishing UG |
| record_format | Article |
| series | Financial Markets, Institutions and Risks |
| spelling | doaj-art-cdbe65eb3ed042b48f0a09fa4e24ceb92025-08-20T03:06:17ZengAcademic Research and Publishing UGFinancial Markets, Institutions and Risks2521-12502521-12422023-12-0174385310.61093/fmir.7(4).38-53.2023Behavioral Finance and the Imperative to Rethink Market EfficiencyMiloudi Kobiyh0https://orcid.org/0000-0003-3974-0527Adil El Amri1https://orcid.org/0000-0003-1849-8727Salah Oulfarsi2https://orcid.org/0000-0001-7332-2893Yassine Hilmi3https://orcid.org/0000-0002-0742-248XProfessor Eligible to Supervise Research in Management Sciences, Member of LERSEM Laboratory, National School of Business and Management (ENCG) El Jadida, University of Chouaib Doukkali, El Jadida, MoroccoProfessor Eligible to Supervise Research in Management Sciences, Member of LERSEM Laboratory, Coordinator of the Master in Banking, Finance & Insurance, National School of Business and Management (ENCG) El Jadida, University of Chouaib Doukkali, El Jadida, MoroccoProfessor Eligible to Supervise Research in Management Sciences, Member of LERSEM Laboratory, National School of Business and Management (ENCG) El Jadida, University of Chouaib Doukkali, El Jadida, MoroccoProfessor Eligible to Supervise Research in Management Sciences, Member of LERSEM Laboratory, National School of Business and Management (ENCG) El Jadida, University of Chouaib Doukkali, El Jadida, MoroccoAccording to traditional finance, investors with rational behaviors examine risk and return before making a decision to obtain maximum profit. However, the exploration of the behavioral path results in deciphering the emotions of participants in the financial markets. The purpose of this work is to examine the role of the psychological theory. The aim is to see how the psychological attractions of actors have been able to acquire a central place in finance, giving rise to behavioral finance, which allows a deeper understanding of investment in the financial markets. This finance is not just a simple presentation of behavioral biases, it aims to use results from cognitive psychology to explain behavioral finance and the imperative to rethink market efficiency. Behavioral biases challenge informational efficiency and can be reflected in prices. Thus, it is a question in this work of explaining behavioral of analyzing how the limit of the efficiency of the financial markets marks the starting point of this approach. This is to highlight its main contribution, which improves decision-making process, and study the factors allowing its integration into the field of finance as an alternative model.https://armgpublishing.com/wp-content/uploads/2024/01/FMIR_4_2023_4.pdfbehavioral biasesemotionfinancial marketdecision-making processrationality |
| spellingShingle | Miloudi Kobiyh Adil El Amri Salah Oulfarsi Yassine Hilmi Behavioral Finance and the Imperative to Rethink Market Efficiency Financial Markets, Institutions and Risks behavioral biases emotion financial market decision-making process rationality |
| title | Behavioral Finance and the Imperative to Rethink Market Efficiency |
| title_full | Behavioral Finance and the Imperative to Rethink Market Efficiency |
| title_fullStr | Behavioral Finance and the Imperative to Rethink Market Efficiency |
| title_full_unstemmed | Behavioral Finance and the Imperative to Rethink Market Efficiency |
| title_short | Behavioral Finance and the Imperative to Rethink Market Efficiency |
| title_sort | behavioral finance and the imperative to rethink market efficiency |
| topic | behavioral biases emotion financial market decision-making process rationality |
| url | https://armgpublishing.com/wp-content/uploads/2024/01/FMIR_4_2023_4.pdf |
| work_keys_str_mv | AT miloudikobiyh behavioralfinanceandtheimperativetorethinkmarketefficiency AT adilelamri behavioralfinanceandtheimperativetorethinkmarketefficiency AT salahoulfarsi behavioralfinanceandtheimperativetorethinkmarketefficiency AT yassinehilmi behavioralfinanceandtheimperativetorethinkmarketefficiency |