Testing Behavioral Finance Theories Using Trends and Sequences in Financial Performance

Testing Behavioral Finance Theories Using Trends and Sequences in Financial Performance

Assessing the predictive ability of behavioral finance theories using out-of-sample data is important. The potentially boundless set of psychological biases underlying the behavioral explanations for observed security price behavior risk over-fitting theory to data. We test pricing effects attributed to a central psychological bias, representativeness, which underlies many behavioral-finance th...

Behavioral Finance Models and Behavioral Biases in Stock Price Forecasting

Stock market is affected by news and information. If the stock market is not efficient, the reaction of stock price to news and information will place the stock market in overreaction and under-reaction states. Many models have been already presented by using different tools and techniques to forecast the stock market behavior. In this study, the reaction of stock price in the stock market was ...

Testing theories of financial decision making.

We describe the observable content of some of the most widely used models of decision under uncertainty: models of translation invariant preferences. In particular, we characterize the models of variational, maxmin, constant absolute risk aversion, and constant relative risk aversion utilities. In each case we present a revealed preference axiom that is satisfied by a dataset if and only if the...

Performance Testing a Large Finance Application

evelopers have been performance testing large database applications for more than 20 years. Up to now, they have focused primarily on system-level testing of operating systems and database management systems. However, just because a machine, its operating system, and its database system are fast does not mean that an application using the database system will perform well. Design flaws in the a...

New Trends in Mathematical Finance