Economics, Econometrics and Finance
4 years ago

Traditional finance theories fail to understand market anomalies, leading to new discipline.

Materials Today Proceedings
WITHDRAWN: Efficient Market Hypothesis to Behavioral Finance: A Review of Rationality to Irrationality
Jyothi E Singh, Vaijanath Babshetti, H. N. Shivaprasad

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The article reviews how the traditional finance theory of Efficient Market Hypothesis (EMH) failed to explain market anomalies and human behavior in investment decisions. It discusses the evolution of Behavioral Finance as a new discipline that bridges the gaps left by EMH. The EMH model was dominant in the 1970s but faced challenges in the 1980s, leading to the rise of Behavioral Finance as a contemporary approach to understanding market behavior.