Abstract
This paper delves into a fundamental analysis of two significant standards in budgetary financial matters: efficient market hypothesis and behavioral finance. The efficient market hypothesis posits that financial markets efficiently process all available information, leading market participants to make rational decisions. This theory underscores the accuracy of market predictions and the efficiency of information processing. In contrast, behavioral finance challenges the efficient markets theory by revealing various cognitive biases and irrational behaviors that influence financial decisions, casting doubt on the accuracy of market predictions and the rationality of market behavior. Through a comprehensive investigation, this article aims to compare these two hypotheses and evaluate their impact on understanding financial markets and decision-making processes. By providing insights into how market efficiency and behavioral inconsistencies coexist and influence financial practice, this article aims to contribute to the ongoing discourse in monetary economics. By delving into these contrasting theories, this paper aims to provide valuable insights into how market efficiency and behavioral factors interact and shape financial outcomes.
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