The DOI matches its Crossref record; 2 of the 2 references it cites were found in a registry or an index.
The Noise Trader Approach to Finance
Open accessAbstract
This paper reviews an alternative to the efficient markets approach that we and others have recently pursued. Our approach rests on two assumptions. First, some investors are not fully rational and their demand for risky assets is affected by their beliefs or sentiments that are not fully justified by fundamental news. Second, arbitrage—defined as trading by fully rational investors not subject to such sentiment—is risky and therefore limited. The two assumptions together imply that changes in investor sentiment are not fully countered by arbitrageurs and so affect security returns. We argue that this approach to financial markets is in many ways superior to the efficient markets paradigm.
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Citations
Cites
Judgment under Uncertainty: Heuristics and Biases
Tversky, A., & Kahneman, D. (1975) · Utility, Probability, and Human Decision Making · doi:10.1007/978-94-010-1834-0_8 · Cited by 22,650
Evidential impact of base rates
Tversky, A., & Kahneman, D. (1982) · Judgment under Uncertainty · doi:10.1017/cbo9780511809477.011 · Cited by 591
Cited by
The Impact of Social Structure on Economic Outcomes
Granovetter, M. (2005) · Journal of Economic Perspectives · doi:10.1257/0895330053147958 · Cited by 2,751
From efficient markets theory to behavioral finance
Shiller, R. J. (2003) · Journal of Economic Perspectives · doi:10.1257/089533003321164967 · Cited by 1,835
An Engine, Not a Camera: How Financial Models Shape Markets
MacKenzie, D. (2006) · doi:10.7551/mitpress/9780262134606.001.0001 · Cited by 1,766
Differences of Opinion Make a Horse Race
Harris, M., & Raviv, A. (1993) · Review of Financial Studies · doi:10.1093/rfs/5.3.473 · Cited by 1,643
Dividend Yields and Expected Stock Returns: Alternative Procedures for Inference and Measurement
Hodrick, R. J. (1992) · Review of Financial Studies · doi:10.1093/rfs/5.3.351 · Cited by 1,523
Metadata
- Authors
- Shleifer, A., & Summers, L. H.
- Venue
- Journal of Economic Perspectives
- Publisher
- American Economic Association
- Published
- 1990-05-01
- Volume
- 4
- Issue
- 2
- Pages
- 19-33
- ISSN
- 0895-3309 (ISSN-L)
- OpenAlex
- W2097152068
- Cited by
- 1,630
- References
- 2
- FWCI
- 30.73
- Type
- journal article
- Language
- en
- Open access
- green
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- Shleifer, A., & Summers, L. H. (1990). The Noise Trader Approach to Finance. Journal of Economic Perspectives. https://doi.org/10.1257/jep.4.2.19
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
