Reflection and application of the feedback model of Shiller

Yangfan Xu

doi:10.54691/bcpbm.v21i.1262

Authors

Yangfan Xu

DOI:

https://doi.org/10.54691/bcpbm.v21i.1262

Keywords:

Behavioral finance, Feedback model, Market efficiency

Abstract

Shiller has made a great contribution to behavior finance through his feedback model. To gain an understanding of the problems emerging from it, this paper summarizes the main ideas of the feedback model of Shiller (2003) and takes overall comments on the feedback model. And nobody has probed into the question that in what settings may feedback model apply more strongly. Therefore, this paper discusses and demonstrates this problem and gives more examples of the feedback model in reality which Shiller doesn’t mention in his paper.

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References

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Menkhoff, L., Nikiforow, M., Professionals’ endorsement of behavioral finance: Does it impact their perception of markets and themselves?, Journal of Economic Behavior and Organization (2008), doi:10.1016/j.jebo.2009.04.004.

Ricciardi, Victor, The Psychology of Risk: The Behavioral Finance Perspective. Handbook of Finance: Volume 2, Frank J. Fabozzi, ed., John Wiley & Sons, pp. 85-111, 2008, Available at SSRN: https:// ssrn.com/ abstract=1155822.

Shiller, R. J. (2003). From efficient markets theory to behavioral finance. Journal of Economic Perspectives, 17(1), pp.83-104.