A Theoretical Perspective on Behavioral Finance With Lagrangian Approach

Year 2019, Volume: 1 Issue: 1, 22 - 27, 11.12.2019

Hakan İnaç

Abstract

Behavioral finance
is a combination of economics and finance. Behavioral finance studies how
emotions and biases affect financial markets. The behavioral finance approach
includes the prospect theory and the efficient market hypothesis.

Prospect theory deals
with investors' attitudes towards stocks, while the effect of prices on
resources is examined in the efficient market hypothesis.  Behavioral finance is interested in the
impact of factors such as overconfidence, mental accounting, and gambler's
fallacy among the factors affecting the investor's behaviors. This paper aims
to explain behavioral finance and the effect of behavioral finance on the
market value of a company.

Keywords

Financial Market, Behavioral Finance, lagrange

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