A behavioral theory of interest rate formation

by James Henry Hines

Publisher: Sloan School of Management, Massachusetts Institute of Technology in Cambridge, Mass

Written in English
Cover of: A behavioral theory of interest rate formation | James Henry Hines
Published: Pages: 25 Downloads: 619
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Edition Notes

Other titlesInterest rate formation, A behavioral theory of.
Statementby James H. Hines, Jr.
SeriesWorking paper / Alfred P. Sloan School of Management -- WP-1771-86, Working paper (Sloan School of Management) -- 1771-86.
The Physical Object
Pagination25 p. :
Number of Pages25
ID Numbers
Open LibraryOL17945655M

  Drug Addiction as a Behavoral Disorder. Behavioral scientists generally regard drug addiction as a behavioral disorder that results when drug reinforcers assume control over a substantial portion of an individual's behavioral repertoire (Higgins, Heil, & Lussier, ).As such, addiction to drugs can be considered a form of excessive behavior, occurring when other activities are expected and Cited by:   Describe the major contributions of behaviorism (as a theory of learning) to education. Be specific and defend your answer -- why are these major contributions? Operant Conditioning - Behaviorism introduces the idea of reinforcement as a key tool for educators. In Skinner’s article we read for class, Skinner argues that reinforcement is a fundamental component. The application of behavioral finance theory to corporate finance is now attracting the attention of a group of academics, many associated with Jeremy Stein, a professor of economics at Harvard University. Behavioral corporate finance argues that in many senses, corporations are natural arbitrageurs. Burrhus Frederic Skinner (Ma – Aug ) was an American psychologist, behaviorist, author, inventor, and social philosopher. He was the Professor of Psychology at Harvard University from until his retirement in Considering free will to be an illusion, Skinner saw human action as dependent on consequences of previous actions, a theory he would articulate as the Awards: National Medal of Science ().

  Investors and researchers have disputed the efficient-market hypothesis both empirically and theoretically. Behavioral economists attribute the imperfections in financial markets to a combination of cognitive biases such as overconfidence, overreaction, representative bias, information bias, and various other predictable human errors in reasoning and information processing. Another was his theory of a "real" rate of interest. His Rate of Interest (), and its extensive revision, which appeared as The Theory of Interest (), offered an explanation of capitalism that made the rate of interest dependent on productivity, time preference, risk, and uncertainty. A behavioral theory of the firm. [Richard Michael Cyert; James G March] are based on reference standards. However, formatting rules can vary widely between applications and fields of interest or study. The specific requirements or preferences of your reviewing publisher, classroom teacher, institution or organization should be applied.   Within psychology, the term habit refers to a process whereby contexts prompt action automatically, through activation of mental context–action associations learned through prior performances. Habitual behavior is regulated by an impulsive process, and so can be elicited with minimal cognitive effort, awareness, control, or intention. When an initially goal-directed behavior Cited by: 4.

From Ef” cient Markets Theory to Behavioral Finance Robert J. Shiller A In , the”rst edition of Burton Malkiel’s acclaimed book, A Random Walk Down Wall Street,appeared, which conveyed this excitement to a wider audience. average real one-year interest rate. The dashed line is the present value for each year of subsequent. There are many good ones. If you have a fundamental approach, I'd highly recommend Philip Tetlock's just published "Superforecasting." His work on expert prediction and improving Intellegence analyst forecasts (judgement under uncertainty) give. Diagram/Curve: In this diagram () when the rate of interest is 6%, the demand for loanable funds is exactly equal to the supply of it. As the rate of interest, which equals the demand for and supply of loanable funds is 6%, so the rate of interest which will rule in the money market will be 6%.

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A behavioral theory of interest rate formationManufacturer: James Henry Hines. This book has an active table of contents for readers to easy access to each chapter. Irving Fisher was the greatest economist the United States has ever produced. He made important contributions to utility theory, general equilibrium, theory of capital, the quantity theory of money and interest rates.5/5(1).

the interest rate on a federal government note. The note is virtually risk-free in terms of default risk because the government has the ability to print money to pay its debt.4 1.

Equilibrium Approach: Simultaneous Equations The theory of interest rate formation developed in this essay is fundamentally a supply and demand formulation.

Behavioral finance, a sub-field of behavioral economics, proposes that psychological influences and biases affect the financial behaviors of investors and financial : Will Kenton.

Meir Statman Behavioral asset pricing theory and behavioral portfolio theory Andrei Shleifer Linkage of behavioral finance with Efficient market Hypothesis to find that stock markets are.

In his book When Work Disappears, Harvard sociologist William Julius Wilson argued that joblessness was the source of most of the behavioral problems encountered in inner-city areas. The interest rate will rise via the increased prices -Price level effect remains even after prices have stopped rising -A rising price level will raise interest rates because people expect inflation to be higher over the course of the year.

Behavioral economics studies the effects of psychological, cognitive, emotional, cultural and social factors on the decisions of individuals and institutions and how those decisions vary from those implied by classical economic theory.

Behavioral economics is primarily concerned with the bounds of rationality of economic oral models typically integrate insights from psychology.

review of the literature. The fourth part of the article shows analysis of the main theories of interest rates. The conclusion are present in the last A behavioral theory of interest rate formation book of the article. LITERATURE ON THE MAIN THEORY OF INTEREST RATE Many debates on interest rate exist today.

There are many different authors and theories which speak about interest Size: KB. Martignon, in International Encyclopedia of the Social & Behavioral Sciences, Information theory is the mathematical treatment of the concepts, parameters and rules governing the transmission of messages through communication systems.

It was founded by Claude Shannon toward the middle of the twentieth century and has since then evolved into a vigorous branch of mathematics fostering.

§ application to this book § confusions to be avoided § a working concept of the rate of interest footnotes for chapter i chapter ii money interest and real interest § 1.

introduction § 2. assuming foresight § 3. limitations of theory. (c) The annual interest rate is 50 = 5% Interest rates are most often computed on an annual basis, but they can be determined for non-annual time periods as well.

For example, a bank o ers you for your deposits an annual interest rate of 10% \compounded" semi-annually. What this means is that if you deposit $ now, then after six. Behaviorism (or behaviourism) is a systematic approach to understanding the behavior of humans and other animals.

It assumes that behavior is either a reflex evoked by the pairing of certain antecedent stimuli in the environment, or a consequence of that individual's history, including especially reinforcement and punishment contingencies, together with the individual's current motivational.

The theory of Kondratieff waves is the only recent variation of the Dow Theory. Both the Elliot wave theory and the theory of Kondratieff waves are recent variations of the Dow Theory. Neither the Elliot wave theory nor the theory of Kondratieff waves are recent variations of the Dow Theory.

Behavioral Interventions Based on the Theory of Planned Behavior Icek Ajzen The theory of planned behavior can provide general guidelines, could produce a considerable increase in the rate of breast self-examinations.

Moreover, following the intervention, there may be much more variability in perceived behavioral control, File Size: KB. Keynesian model that determines the equilibrium interest rate in terms of the supply of and demand for money.

There are two main categories of assets that people use to store their wealth: money and bo ss d d sd s d sd sd nds. Total wealth in the economy = B M = B + MFile Size: KB. Behavioral Accounting: An accounting method which takes into account key decision makers as part of the value of a company.

Behavioral accounting was developed to. The behavioral theory of the firm (Cyert & March, ) offers a good platform for integrating devel- opment and decision-making ideas of innovations. Developing innovations is a form of organizational search, so theories of innovation development cor- respond to.

We develop a positive behavioral portfolio theory (BPT) and explore its implications for portfolio constrution and security design. The optimal portfolios of BPT investors resemble combinations of bonds and lotterly tickets consistent with Friedman and Savage's () by: In their new book "Crisis of Beliefs: Investor Psychology and Financial Fragility," Nicola Gennaioli and Andrei Shleifer present a comprehensive new theory of belief formation that explains how beliefs shape financial markets, and the destabilizing role the beliefs of home buyers, investors, and regulators played in the period leading up to and during the recent financial crisis.

Chapter 3 Behavioral Investment Theory To do anything—locate food, find a mate, reproduce, compose a sonata, solve an equation—you have to stay alive with enough surplus energy to perform the task at hand.

Energy management drove the foundational adaptive design of all ancestral intelligence systems. All subsequent design features evolved as. Henrich R. Greve, Linda Argote, in International Encyclopedia of the Social & Behavioral Sciences (Second Edition), Institutional Theory. Institutional theory is a research tradition that traces its origins back to foundational articles that discussed how organizational founding and change were driven less by functional considerations and more by symbolic actions and external influences.

The behaviour of interest rates 1. Chapter 4: The Behaviour of Interest Rates Prepared by: Mohammad Radzie Osman Muhammad Syazmi Adli Zainal Abidin Nickhlos Ak Jalang Cynthia Bunya 2. Concepts of interest rate and rate of return 3. Interest Rate Interest is a return on capital.

the interest rate. Keynes‟ theory of the interest rate was approved by the majority of economists; on the one hand this entailed rejecting the previously held doctrine, and on the other accepting a different way of arguing in economics. This analysis is a critical study of the theory of theFile Size: KB.

The Business of Behavioral Economics. Leslie John and Michael Norton explore how behavioral economics can help people overcome bad habits and change for the better. You've done everything—endured diets, purged your freezer of Ben & Jerry's, and educated yourself on fat, sugar, and calories.

Yet, you can't manage to lose weight. This chapter discusses how two behavior theories can be applied to financial behavior research.

The theory of planned behavior (TPB) is a motivational theory designed to predict and understand Author: Jing Jian Xiao.

CBT is the treatment of choice. In a recent blog post, Dr. David M. Allen, a psychoanalytic psychiatrist, attacks cognitive-behavioral therapy (CBT), claiming that it is a simplistic approach that. Social and Behavioral Theories Author Biography.

Karen Glanz, PhD, MPH is George A. Weiss University Professor, a Penn Integrates Knowledge Professor in the Perelman School of Medicine and the School of Nursing, and Director of the Center for Health Behavior Research at the University of came to Penn in after professorships at Emory University, the University of.

Originary interest does not spring from the passing of time, but from the value relationship between means and ends. the means of action are inherently less valuable than the ends they serve. Therefore there is a value spread between means and ends— originary interest—in all human actions in which means and ends can be distinguished.

Information ratio definition As we already discussed in the introduction, the information ratio in finance is one of the most important ratios in active management. The appraisal ratio measures the level of outperformance of an active strategy over the benchmark.

While behavioral portfolio management rejects the basic tenets of modern portfolio theory (MPT), the careful and rigorous statistical analysis of historical data remains. Instead of using these methods to show that markets are informationally efficient, they are used to identify measurable and persistent price distortions.Behavioral finance has the potential to be a valuable supplement to classical and neoclassical financial theory, which currently dominates financial analysis.

It considers psychological factors as important input to financial analysis and decisions and is gaining increasing momentum in academic research and practical application in the U.S.

and.Foreign Direct Investment Theories: An Overview of the Main FDI Theories Vintila Denisia Academy of Economic Studies, Bucharest, [email protected] Abstract Foreign Direct Investment (F DI) acquired an important role in the international economy after the Second World War.