Behavioral finance FAQ / Glossary
(Behavioral financial analysis)

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This is a separate page of the B section of the Glossary

 

Dates of related message(s) in the
Behavioral-Finance group (*):
Year/month, d: developed / discussed,
i: incidental

Behavioral asset pricing model (BAP)

See behavioral financial analysis
(below) + image coefficient

Behavioral biases in finance / economics

This article has its own page

Behavioral finance (BF)

This article has its own page

Behavioral financial analysis (BA, BFA)

See image coefficient, behavioral
finance,
over- / under-reaction,
valuation, debiasing

BFA as the 4th side of the
market analysis magical (?) square.
As an adjustment to the world of financial anomalies!

Definition

The human side of prices.

BFA / Behavioral financial analysis is a set of
techniques that
use behavioral finance findings
(see behavioral finance) to estimate future
asset prices or trends 

Some see a behavioral finance weakness in the fact that it does not
create
its own analysis models, but refers instead to
"anomalies"
, as discrepancies between actual prices and returns
and those found in standard pricing models.

Tools

Your honor, the accusation above against Behavioral finance
is not fully true!

It does not always steal weapons from the other gangs, it also
makes its own!

There are at least three known Behavioral analysis / Behavioral
valuation tools
that has been found useful in finance (see the related
pages in this glossary):

1) The detection of under-reactions / over-reactions

to events, so as to spot price trends.

2) Shefrin's debiasing / rebiasing process, which suppose a

    good understanding of the potential market biases.

3) The image coefficient, that helps to estimate potential prices

(behavioral valuation),

BFA is the fourth side of the "stock analysis square".

The three others are fundamental analysis, technical analysis and
quantitative
analysis (see those words).

=> There is no "string theory" to unite those four types of analyses.

It is true that they have at least as many points of contradiction than
of convergence.
Just find your own way among them

Behavioral (market) parameters

00/9i + see above behavioral
analysis
+ see image coefficient

Behavioral market parameters are linked to the incidences of investor behaviors
and include levels and changes of

* Prices,

* Returns,

* Volumes,

* Volatility.

=> One example is the stock image coefficient,
      another is trend persistence (Hurst coefficient).

Behavioral portfolio theory (BPT)

02/11i + see above behavioral
analysis
+ see image coefficient

Behavioral pricing

07/4 + see above behavioral
analysis
+ see image coefficient

Priced according to your tastes (and your pockets).

Definition

Behavioral pricing defines usually a marketing technique that adapt
the prices of goods and services to customer preferences (and to their
purchasing power).

The phrase can be extended to financial assets, with the sense of
behavioral valuation
(see behavioral analysis).

Behavioral stock pricing model (BSPM), Behavioral valuation

See above: behavioral
analysis + see image
coefficient

(*) To find those messages: reach that BF group and, once there,
     1) click "messages", 2) enter your query in "search archives".

Members of the BF Group, please
 vote on the glossary quality at
BF polls

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This page last update: 23/08/15  

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