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Cited by 497Financial Markets and Investment StrategiesDecision-Making and Behavioral EconomicsFinancial Literacy, Pension, Retirement Analysis

Behavioral Finance

Hirshleifer, David·2015·Annual Review of Financial Economics
DOI 10.1146/annurev-financial-092214-043752

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Abstract

Behavioral finance studies the application of psychology to finance, with a focus on individual-level cognitive biases. I describe here the sources of judgment and decision biases, how they affect trading and market prices, the role of arbitrage and flows of wealth between more rational and less rational investors, how firms exploit inefficient prices and incite misvaluation, and the effects of managerial judgment biases. There is a need for more theory and testing of the effects of feelings on financial decisions and aggregate outcomes. Especially, the time has come to move beyond behavioral finance to social finance, which studies the structure of social interactions, how financial ideas spread and evolve, and how social processes affect financial outcomes.

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Crossref · 10.1146/annurev-financial-092214-043752

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14 of 14 references verified0 citation errors · 0 not checkable

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  • The disposition effect is widely regarded as one of the most robust and important trading patterns arising from psychological bias.

    “the disposition effect is widely regarded as one of the most robust and important trading patterns arising from psychological bias (Hirshleifer, 2015).”

    From Striking Out: Biases and Losses of Retail Option Traders (2024) · cites this paper as Hirshleifer, 2015

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Authors
Hirshleifer, D.
Affiliations
University of California, Irvine (US)
Corresponding author
Hirshleifer, David
ORCID
Hirshleifer, David
Venue
Annual Review of Financial Economics
Publisher
Annual Reviews
Published
2015-12-07
Volume
7
Issue
1
Pages
133-159
ISSN
  • 1941-1367 (ISSN-L)
  • 1941-1375
DOI
10.1146/annurev-financial-092214-043752
OpenAlex
W4234620788
Cited by
497
References
14
Citations by year
2026: 48 · 2025: 73 · 2024: 88 · 2023: 56 · 2022: 56 · 2021: 50 · 2020: 36 · 2019: 38 · 2018: 19 · 2017: 14 · 2016: 13 · 2015: 4 · 2014: 2
FWCI
6.01
Type
journal article
Language
en
Open access
closed
Locations
Annual Review of Financial Economics (publishedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
  • Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
  • Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy, Pension, Retirement Analysis
Keywords
behavioral finance, cognitive biases, decision bias, investor decision-making, trading behavior, market prices, arbitrage, investor flows, misvaluation, social finance

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