chapter  1
14 Pages

Behavioral finance and markets: Gur Huberman

The main contribution of the behavioral approach has so far been to question the validity of modeling the individual decision maker as optimizing a simple objective. The earlier pioneers are Allais (1953) and Ellsberg (1961). More recently, the profuse work of Kahneman and Tversky (1979) (with various coauthors) has had the strongest impact. Their joint paper on Prospect Theory in Econometrica (Kahneman and Tversky 1979) is reputed to be the most cited paper in that highly esteemed journal.