Behavioral finance offers insights into market inefficiencies from "summary" of Beyond Greed and Fear:Understanding Behavioral Finance and the Psychology of Investing by Hersh Shefrin
Behavioral finance shines a light on market inefficiencies by recognizing that investors are not always rational. This field of study delves into the psychological factors that can lead investors to make decisions that deviate from the traditional rational model. By understanding these cognitive biases and emotional influences, we can gain valuable insights into why markets may not always behave in a perfectly efficient manner. One key aspect of behavioral finance is the acknowledgment that investors do not always process information in an objective and logical manner. Instead, they may rely on mental shortcuts or heuristics that can lead to systematic errors in judgment. ...
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