Skip Navigation

This Article
Right arrow Full Text (PDF)
Right arrow Alert me when this article is cited
Right arrow Alert me if a correction is posted
Services
Right arrow Email this article to a friend
Right arrow Similar articles in this journal
Right arrow Similar articles in ISI Web of Science
Right arrow Alert me to new issues of the journal
Right arrow Add to My Personal Archive
Right arrow Download to citation manager
Right arrow Search for citing articles in:
ISI Web of Science (42)
Right arrowRequest Permissions
Google Scholar
Right arrow Articles by Brav, A.
Right arrow Articles by Heaton, J.B.
Right arrow Search for Related Content
Related Collections
Right arrow G12 - Asset Pricing
Right arrow G14 - Information and Market Efficiency; Event Studies
Social Bookmarking
Add to CiteULike   Add to Connotea   Add to Del.icio.us  
What's this?

Rev Fin 2002; 15:575-606
© 2002 the Society for Financial Studies

Competing Theories of Financial Anomalies

Alon Brav
Duke University

J.B. Heaton
Bartlit Beck Herman Palenchar & Scott and Duke University

Abstract

We compare two competing theories of financial anomalies: "behavioral" theories built on investor irrationality, and "rational structural uncertainty" theories built on incomplete information about the structure of the economic environment. We find that although the theories relax opposite assumptions of the rational expectations ideal, their mathematical and predictive similarities make them difficult to distinguish. Even if irrationality generates financial anomalies, their disappearance still may hinge on rational learning—that is, on the ability of rational arbitrageurs and their investors to reject competing rational explanations for observed price patterns.


Add to CiteULike CiteULike   Add to Connotea Connotea   Add to Del.icio.us Del.icio.us    What's this?


This article has been cited by other articles:


Home page
 REV FINANC STUDHome page
P. Kumar, S. M. Sorescu, R. D. Boehme, and B. R. Danielsen
Estimation Risk, Information, and the Conditional CAPM: Theory and Evidence
Rev. Financ. Stud., May 1, 2008; 21(3): 1037 - 1075.
[Abstract] [Full Text] [PDF]

Home page
 REV FINANC STUDHome page
H. H. Cao and H. Ou-Yang
Differences of Opinion of Public Information and Speculative Trading in Stocks and Options
Rev. Financ. Stud., March 27, 2008; (2008) hhn020v1.
[Abstract] [Full Text] [PDF]

Home page
 Organization StudiesHome page
D. Beunza, I. Hardie, and D. MacKenzie
A Price is a Social Thing: Towards a Material Sociology of Arbitrage
Organization Studies, May 1, 2006; 27(5): 721 - 745.
[Abstract] [PDF]

Home page
 REV FINANC STUDHome page
C. Hommes, J. Sonnemans, J. Tuinstra, and H. van de Velden
Coordination of Expectations in Asset Pricing Experiments
Rev. Financ. Stud., September 1, 2005; 18(3): 955 - 980.
[Abstract] [Full Text] [PDF]


Disclaimer:
Please note that abstracts for content published before 1996 were created through digital scanning and may therefore not exactly replicate the text of the original print issues. All efforts have been made to ensure accuracy, but the Publisher will not be held responsible for any remaining inaccuracies. If you require any further clarification, please contact our Customer Services Department.