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  2. Keynesian beauty contest - Wikipedia

    en.wikipedia.org/wiki/Keynesian_beauty_contest

    One selected the animal they thought was cutest, and the other selected the one they thought most participants would think was the cutest. The results showed significant differences between the groups. Fifty percent of the first group selected a video with a kitten, compared to seventy-six percent of the second selecting the same kitten video.

  3. Stock market bubble - Wikipedia

    en.wikipedia.org/wiki/Stock_market_bubble

    Behavioral finance theory attributes stock market bubbles to cognitive biases that lead to groupthink and herd behavior. Bubbles occur not only in real-world markets, with their inherent uncertainty and noise, but also in highly predictable experimental markets. [ 1 ]

  4. Behavioral economics - Wikipedia

    en.wikipedia.org/wiki/Behavioral_economics

    Behavioral Finance attempts to explain the reasoning patterns of investors and measures the influential power of these patterns on the investor's decision making. The central issue in behavioral finance is explaining why market participants make irrational systematic errors contrary to assumption of rational market participants. [1]

  5. Disposition effect - Wikipedia

    en.wikipedia.org/wiki/Disposition_effect

    The prospect theory can explain such phenomena as people who prefer not to deposit their money in a bank, even though they would earn interest, or people who choose not to work overtime because they would have to pay higher taxes. It also plainly underlies the disposition effect.

  6. Prospect theory - Wikipedia

    en.wikipedia.org/wiki/Prospect_theory

    Prospect theory is a theory of behavioral economics, judgment and decision making that was developed by Daniel Kahneman and Amos Tversky in 1979. [1] The theory was cited in the decision to award Kahneman the 2002 Nobel Memorial Prize in Economics .

  7. Expected utility hypothesis - Wikipedia

    en.wikipedia.org/wiki/Expected_utility_hypothesis

    The classical counter example to the expected value theory (where everyone makes the same "correct" choice) is the St. Petersburg Paradox. [3] In empirical applications, a number of violations of expected utility theory have been shown to be systematic and these falsifications have deepened understanding of how people actually decide.

  8. Endowment effect - Wikipedia

    en.wikipedia.org/wiki/Endowment_effect

    For example, in the case of Kahneman et al.'s (1990) classic mug experiments (where sellers demanded about $7 to part with their mug whereas buyers were only willing to pay, on average, about $3 to acquire a mug) there was likely a range of prices for the mug ($4 to $6) that left the buyers and sellers without much incentive to either acquire ...

  9. Adaptive market hypothesis - Wikipedia

    en.wikipedia.org/wiki/Adaptive_market_hypothesis

    The adaptive market hypothesis, as proposed by Andrew Lo, [1] is an attempt to reconcile economic theories based on the efficient market hypothesis (which implies that markets are efficient) with behavioral economics, by applying the principles of evolution to financial interactions: competition, adaptation, and natural selection. [2]