Comments: behavioral versus rational economics: what you see is what you conquer

Article Abstract:

It is unlikely that the debates between rationalist and behavioralist economics will be resolved soon. Rationalists argue that the theory of rationality is the most accurate and comprehensive hypothesis for explaining the operation of markets, while behavioralists maintain that there is simply too much nonrational market behavior for rationality to be descriptively accurate. The major areas of contention are reviewed in order to define which subjects are best served by rational analysis and which are more accurately described by behavioral analysis.

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Clearly heard on the street: the effect of takeover rumors on stock prices

Article Abstract:

The impact of takeover rumors on stock prices was studied by analyzing the Wall Street Journal's 'Heard on the Street' daily column from Jan 1, 1983, through Dec 31, 1985. The results indicated that the market was efficient in reacting to the possibility of a takeover, the price of the target company's stock usually increased significantly before the takeover rumors were published, rumors did not accurately predict takeover bids, and rumors were generated by stock market observers looking for unusual changes in stock prices.

Research, Prices and rates, Stocks, Acquisitions and mergers, Stock prices, The Wall Street Journal (Newspaper), Rumor

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Comments on Miller and on Kleidon

Article Abstract:

The research papers of Allen Kleidon and Merton Miller, which investigate supposed anomalies in the efficient markets theory, are discussed. Both papers attempted to show that behavioral explanations for anomalies in financial models are invalid, and that in many cases, no such anomalies exist. These claims are rebutted, and the role of irrational behavior in determining stock prices is described.

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