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The Handbook of Post Crisis Financial Modeling pp 214–234Cite as

Palgrave Macmillan

Evolutionary Behavioral Finance

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Abstract

The creation and protection of financial wealth is one of the most important roles of modern societies. People will commit to working hard and saving for future generations only if they can be sure that the efforts they exert every day will be rewarded by a better standard of living. This, however, can only be achieved with a well-functioning financial market. Unfortunately, a breakdown of the financial system as in the great financial crisis of 2007 and 2008 destroys the trust in this important social arrangement. To avoid such crises we need to improve our understanding of financial markets that, so far, has been built on totally unrealistic assumptions about the behavior of people acting in them. The most fundamental and at the same time the most questionable in modern economic theory is the hypothesis of full rationality of economic agents who are assumed to maximize their utility functions subject to their individual constraints, or in mathematical language, solve well-defined and precisely stated constrained optimization problems.

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Authors
  1. Igor Evstigneev
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  2. Thorsten Hens
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  3. Klaus Reiner Schenk-Hoppé
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Editor information

Editors and Affiliations

  1. School of Management and Institute of Finance, University of Leicester, UK

    Emmanuel Haven (Professor) (Professor)

  2. College of Business, Law, Education and Social Science, Bangor University, UK

    Philip Molyneux (Dean) (Dean)

  3. University of St Andrews, UK

    John O. S. Wilson (Professor of Banking and Finance) (Professor of Banking and Finance)

  4. University of Manchester, UK

    Sergei Fedotov (Professor of Applied Mathematics) (Professor of Applied Mathematics)

  5. Hull University Business School, UK

    Meryem Duygun (Professor of Banking and Finance) (Professor of Banking and Finance)

Copyright information

© 2016 Igor Evstigneev, Thorsten Hens and Klaus Reiner Schenk-Hoppé

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Cite this chapter

Evstigneev, I., Hens, T., Schenk-Hoppé, K.R. (2016). Evolutionary Behavioral Finance. In: Haven, E., Molyneux, P., Wilson, J.O.S., Fedotov, S., Duygun, M. (eds) The Handbook of Post Crisis Financial Modeling. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-137-49449-8_9

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