A Review On Robert J. Shiller’s Behavioral Finance Thought

Shefrin, the famous behavioral financial economist, defined "behavioral finance" on the first page of his masterpiece A Behavioral Approach to Asset Pricing published in2005:"Behavioral finance is the study of how psychological phenomena impact financial behavior." This discipline originated from some early financial economists, who found that people do not have any personal characteristic when referring to most standard textbooks on finance and related academic papers, e.g. the greediness, abnormality, and eccentricity of market participants. The emergency of the discipline shows that two kinds of scholars are focusing on the finance research:one considers hypotheses as simple tools to deliver accurate anticipations; the one worries about the theories isolated from reality would result in irreversible mistakes. This paper studies on Professor Robert J. Shiller, an acknowledged behavioral financial economist, also one of the founders of this discipline, and Professor Shiller is definitely the latter kind of scholar. He focused and studied finance from the behavioral perspective much early than his majority fellows. This paper reviewed the oversea and domestic related literatures, and studied and sorted Professor Shiller’s research achievements. From early studies, represented by Market Volatility, to recent a more broad macro perspective, showed in Finance and Good Society, also combined with his other works, I tried to present his fabulous ideas so that domestic academy can get inspired from him.