| Pub. Date | : Oct, 2020 |
|---|---|
| Product Name | : The IUP Journal of Applied Economics |
| Product Type | : Article |
| Product Code | : IJAE21020 |
| Author Name | : Kavous Ardalan |
| Availability | : YES |
| Subject/Domain | : Economics |
| Download Format | : PDF Format |
| No. of Pages | : 15 |
The purpose of this paper is to emphasize the implication of neurofinance with respect to the efficient market hypothesis. To this end, the paper first brings to the fore two aspects of neurofinance, namely, thinking imposes strain on the mind, and making judgment involves emotions, as a result of which some individuals introduce noise to financial markets. The paper then discusses the role of noise traders in making financial markets inefficient.
Neurofinance is an emerging transdisciplinary field that uses neuroscientific measurement techniques to identify the neural substrates associated with financial decisions. Neurofinance intends to go beyond behavioral finance1 as it promises to identify the physiological causes underlying deviations from neoclassical utility maximizing behavior.