Behavioral Asset Pricing Theory

Author: Chen Yanbin
Publisher:
Publish Date: 2006-05-25
Features: Asset pricing theory holds a central position in finance. The research content of asset pricing theory mainly involves two aspects: how investors allocate wealth among various risky assets optimally, and how investors determine the equilibrium prices of various risky assets in the market. The answers to these two questions are generally referred to as portfolio theory and asset pricing theory. Since portfolio theory and asset pricing are closely interconnected, they are often collectively referred to as asset pricing theory. Since Markowitz proposed the mean-variance portfolio selection model in 1952, asset pricing theory has undergone significant development, giving rise to and continuing to produce an endless stream of models. These models have not only enriched asset pricing theory but also had a profound impact and on other branches of economics. Therefore, it is highly meaningful to understand the underlying development patterns of these models and grasp the future trends of asset pricing theory. In the process of investors participating in asset markets, investors' behavior and the risks of the asset market are interactive and mutually influential. The development of asset pricing theory is a process of continuously deepening the understanding of investor behavior and risk. This work attempts to understand the development of asset pricing theory over the past fifty years from the perspective of investor behavior and risk.