Hersh Shefrin

While the behavioral approach to finance and economics has gained considerable traction in academic circles over recent years, it is still not sufficiently established that many semester-long courses are devoted to the topic. (I, for instance, concentrate a couple of lectures to behavioral issues during my undergraduate and Master’s level survey classes in Investment Theory and Practice.) Further, those behavioral finance classes that do exist tend to use reading lists of original research articles or collections of those articles, such as Richard Thaler’s Advances in Behavioral Finance or Andrei Shleifer’s Inefficient Markets.

However, Shefrin’s Beyond Greed and Fear comes a lot closer to serving the role of a textbook for the field in that it provides the reader with both an integrated overview of the issues and a summary of the relevant research in the area. All the major psychological themes—e.g., overconfidence, representativeness, anchoring, frame dependence, loss aversion and Prospect Theory, mental accounting—are considered here, along with several useful examples and applications to practical decision-making. For someone just beginning to think about these topics, this is a good place to start.… (altro)