Behavioral rationality in finance: the case of dividends

Article Abstract:

In the debate between rationalist and behaviorist economics, one area in which rationalism seems unable to account for anomalies is the supply and demand of dividends. However, a review of empirical data related to dividends shows that the supposed anomalies related to dividends can be traced to misinterpretations of the models and unrealistic expectations of what models can accomplish. Behavioral factors are not seen as crucial adjuncts to the financial model in comparative applications.

Analysis, Dividends

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Rational choice in experimental markets

Article Abstract:

The theory of rational behavior and choice can be used to establish preference parameters in experiments, to help explain phenomena such as bidding and speculation, to create models of results that would otherwise be incomprehensible, and as a problem solving tool in the design of new institutions. Although the theory cannot be confirmed when tested, no alternative theory has replaced the theory of rational individual choice because it is so useful.

Models, Economic aspects, Auctions, Choice (Psychology), Rational expectations (Economics)

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