Noise, Uncertainty and Investor Psychology: A Behavioral Analysis

Abstract

The aim of this paper is to focus the interest on the behavioral finance contribution that helps understanding the financial market volatility. In order to put in evidence such an eventual GARCH effect between the exchange volume and the volatility of stock prices on Tunisian financial market. We borrowed the approach of Moschetto (1998) and Najand and Yung (1991) allowing the assessment of the GARCH (1, 1) Model. The data set consists of weekly stock prices and transaction volume. The sample period runs from January 2002 to January 2013.The results pointed to significant positive effect of volume on stock prices that highlights the investor irrational behavior when uncertainty is ruling over the market.

How Lending Experience and Borrower Credit Influence Rational Herding Behavior in Peer-to-Peer Microloan Platform Markets

“…Simonsohn and Ariely [92] suggested 13 that the basis of rational herding is the ability of observers to make unbiased inferences from the decisions they observe. However, people can be irrational [33,44,75]. Simonsohn and Ariely [92] suggested that irrational herding occurs when consumers (in our context, lenders) simply mimic others without rationally processing their observations of others' decisions.…”