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Evolutionary Behavioral Finance

  • Igor Evstigneev
  • Thorsten Hens
  • Klaus Reiner Schenk-Hoppé

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.

Keywords

Asset Price Prospect Theory Initial Endowment Evolutionary Stable Strategy Asset Market 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

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

Authors and Affiliations

  • Igor Evstigneev
  • Thorsten Hens
  • Klaus Reiner Schenk-Hoppé

There are no affiliations available

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