Merger

* Traditional finance argues that markets are efficient, implying that the price each security is an unbiased estimate of its intrinsic value. Behavioural finance contends that heuristic-driven biases and errors, frame dependence, and effects of emotions and social influence often lead to discrepancy between market price and fundamental value.

Below is a discussion of heuristic-driven biases, frame dependence, emotional and social influences, and market inefficiencies. Note that while these things are discussed separately for pedagogic convenience, they are interrelated in subtle ways

Representativeness refers to the tendency to form judgments based on stereotypes. For example, you may form an opinion about how a student would perform academically in college on the basis of how he has performed academically in school. While representativeness may be a good rule of thumb, it can also lead people astray. For example

Representativeness refers to the tendency to form judgments based on stereotypes. For example, you may form an opinion about how a student would perform academically in college on the basis of how he has performed academically in school. While representativeness may be a good rule of thumb, it can also lead people astray. For example

Representativeness refers to the tendency to form judgments based on stereotypes. For example, you may form an opinion about how a student would perform academically in college on the basis of how he has performed academically in school. While representativeness may be a good rule of thumb, it can also lead people astray. For example

Representativeness refers to the tendency to form judgments based on stereotypes. For example, you may form an opinion about how a student would perform academically in college on the basis of how he has performed academically in school. While representativeness may be a good rule of thumb, it can also lead people astray. For example

Representativeness refers to the tendency to form judgments based on stereotypes. For example, you may form an opinion about how a student would perform academically in college on the basis of how he has performed academically in school. While representativeness may be a good rule of thumb, it can also lead people astray. For example