Financial Market Equilibrium Under Financial Imbalance - A Case Study
14 Pages Posted: 1 Mar 2015
Date Written: February 28, 2015
Abstract
The behavioural present value is usually modelled as fuzzy subset in the real line. In following paper the behavioural present value is applied to explain financial market paradox of simultaneous buying and selling a financial instrument by investors, which occurs despite following the same information. The main goal of this paper is to present an numerical example in form of a case study, which explains the mechanisms of this paradox. Also, an algorithm modelling the transaction under financial imbalance and behavioural premises is described.
Keywords: behavioural finance, present value, fuzzy set
JEL Classification: C44, C02, G10
Suggested Citation: Suggested Citation