Are normative models in Finance realistic?

  1. Peón, David
  2. Antelo, Manel
Journal:
Cuadernos de economía: Spanish Journal of Economics and Finance

ISSN: 2340-6704,  0210-0266

Year of publication: 2012

Volume: 35

Issue: 98

Pages: 89-99

Type: Article

DOI: 10.1016/S0210-0266(12)70026-2 DIALNET GOOGLE SCHOLAR lock_openBiblos-e Archivo editor

More publications in: Cuadernos de economía: Spanish Journal of Economics and Finance

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Abstract

In this paper we approach financial investors to see how they analyze financial markets, adopt their investment decisions, and buy financial products. Our main goal is to ascertain whether or not the investment guidelines provided by the most accepted normative theories in Finance are carried out in practice by investors. In order to do that, we review the main financial theories, either normative or descriptive, and we then provide empirical evidence of the investors' behaviour. Findings show that investors often disobey the recommendations offered by normative theories in Finance.

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Funding information

financial aid from Galician Autonomous Government (Xunta de Galicia) through Grant INCITE09201042PR. The usual disclaimer applies.

Funders

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