International Journal of Finance, Insurance and Risk Management ISSN: 2047-0916

Fuzzy Logic and Behavioral Finance: An Approach Using Fuzzy c-Means Algorithm

Renato Aparecido Aguiar
International Journal of Finance, Insurance and Risk Management, Volume 2, Issue 1, 1, 2012
DOI: 10.35808/ijfirm/28

Abstract:

The aim of this paper is to show the connection between the behavioral finance theory and fuzzy sets theory. Such connection, little explored by researchers, may produce new models for the financial market, leading to a better understanding of anomalies not explained by modern theory of finance. In this paper two techniques based on fuzzy sets, an clustering algorithm and the fuzzy transform shown incorporate, intrinsically, the heuristics of representativeness and anchoring of the behavioral finance theory


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