(Institute of Social Sciences, 2019)
Şen, Mine Ceren; Taş, Oktay; 569194; Management Business Administration; İşletme Yönetimi
The Efficient Market Hypothesis was acknowledged among academic society a generation ago. The hypothesis depends on the idea that if any mispricing occurs, the market will return instantaneously to its equilibrium price since it would be immediately arbitraged away. Hence, the stock market is full of events like the Black Monday Crash which occurred in 1987. Thus, traditional financial models have faced difficulty in fitting these patterns. Since the traditional finance models are found inadequate in explaining financial anomalies through the market, the researchers have been in an attempt to generate alternative models that consider behavioral and psychological factors. Thus, the suggested behavioral finance phenomenon depends on two basic assumptions that the investors are subject to sentiment and that there are limits to arbitrage. They specifically assume that investors are irrational.