New answers tagged behavioral-economics
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A related concept you might be looking for could be "mental accounting", first introduced by Richard Thaler.
According to mental accounting, people treat money as less fungible than it really is. Fungibility means that, all money is the same, regardless of any other factors, including intended use. However, people often budget money into mental ...
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The claim that financial markets are efficient is backed by an implicit argument that misinformed "noise traders" can have little influence on asset prices in equilibrium. If noise traders' beliefs are sufficiently different from those of rational agents to significantly affect prices, then noise traders will buy high and sell low. They will then ...
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