Keen Behavioural Finance 2011 Lecture03 Finance Markets Behaviour Part 1

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Uploaded by on Aug 17, 2011

John von Neumann developed Expected Utility theory to wean economists off indifference curve analysis and onto a numerical basis for utility. Instead, they combined indiffiference curves with absurd assumptions about individual behavior in asset markets and a confusion of risk with uncertainty to develop the Capital Assets Pricing Model.

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  • @ApocalypticAang As my dad once said to me... "nah mate you don't wanna do that, they're just politically motivated statisticians. If you really wanna know how the world works study history"

  • hey I'm normal!

  • "The proper test of a theory is not the realism of its assumptions, but the acceptabiity of its implications"-- William Forsyth Sharpe, Nobel Prize Winner

    LOL, I gotta remember this for the next time I choose to tell a beautiful/white lie instead of the ugly/hard truth-- it never occurred to me that neo-classical economics works just like American politics...

    Steve, you make me feel really bad about "aggregating" all those individual curves (to "derive" market curves) in my exams back then!

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