COUNTY BEHAVIORAL

Behavioral finance often criticizes rational finance for not being able to explain certain weird things in the stock market, like why prices seem to follow patterns and why stocks are so risky compared to bonds. But hold on, says this paper. Maybe we don't need to blame people's weird behaviors just

Behavioral finance, which studies how human psychology affects financial markets, has long pointed out three puzzles that seem to defy the theory of rational finance. These puzzles are the predictability of asset prices, the equity premium puzzle, and the volatility puzzle. In simple terms, these pu