A Behavioral Approach to Asset Pricing

Growing interest in the alternatives that behavioral assumptions offer to traditional rational expectations models has led many scholars to investigate the insights this developing area can offer to traditional financial models. In this book, Shefrin examines the reigning assumptions of asset pricing theory and reconstructs them to incorporate findings from behavioral finance. In other words, he takes the traditional tools in asset pricing and behavioralizes them. He constructs a solid, intact structure that challenges classic assumptions and at the same time provides a strong theory and efficient empirical tools. Building on the models developed by both traditional asset pricing theorists and behavioral asset pricing theorists, Shefrin's book takes the discussion to the next step.