Toward a general model of financial markets

Nihad Aliyev, Xue-Zhong He

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

Abstract

This paper discusses the idea of reconciling efficient market hypothesis and behavioral finance using the literature of decision theories and information sciences. The focus is centered on the precision and reliability of information and the broad definition of rationality. The main thesis advanced is that the roots of behavioral anomalies are the imprecision and reliability of information. We propose a general framework that subsumes efficient and inefficient markets as special cases. We also show that the proposed framework helps to understand behavioral anomalies.
Original languageEnglish
Title of host publicationArtificial intelligence, learning and computation in economics and finance
EditorsRagupathy Venkatachalam
Place of PublicationCham
PublisherSpringer, Springer Nature
Pages71-100
Number of pages30
ISBN (Electronic)9783031152948
ISBN (Print)9783031152931
DOIs
Publication statusPublished - 2023
Externally publishedYes

Publication series

NameUnderstanding Complex Systems
ISSN (Print)1860-0832
ISSN (Electronic)1860-0840

Keywords

  • Efficient markets
  • Behavioral finance
  • Decision theory
  • Information uncertainty

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