Editing Behavioral economics (section)

=== Quantitative behavioral finance ===
[[Quantitative behavioral finance]] uses mathematical and statistical methodology to understand [[behavioral bias]]es.
Some [[financial model]]s used in money management and asset valuation, as well as more [[financial economics|theoretical models]], likewise, incorporate behavioral finance parameters. Examples:
* Thaler's model of price reactions to information, with three phases (underreaction, adjustment, and overreaction), creating a price [[market analysis#Market trends|trend]]. (One characteristic of overreaction is that average returns following announcements of good news is lower than following bad news. In other words, overreaction occurs if the market reacts too strongly or for too long to news, thus requiring an adjustment in the opposite direction. As a result, outperforming assets in one period is likely to underperform in the following period. This also applies to customers' irrational purchasing [[habit]]s.<ref>{{cite web|url=http://flevy.com/blog/why-people-wont-buy-your-product-even-though-its-awesome/|title=Why People Won't Buy Your Product Even Though It's Awesome|last=Tang|first=David|date=6 May 2013|publisher=Flevy|access-date=31 May 2013}}</ref>)
* The [[stock valuation|stock image]] coefficient
* [[Artificial financial market]]
* [[Market microstructure]]