1.

Definition of Behavioral Finance 

2. Foundation of Behavioral Finance 
3. History of Behavioral Finance 
4. Scope of Behavioral Finance 
5. Concepts of Behavioral Finance

Miller (2000) suggests that research in finance falls into two streams: micro-normative and macro-
normative. The first vein is concerned with individual decision-making and is historically associated with
the approach taken by Business Schools aiming to 37 Illiashenko P. / Visnyk of the National Bank of
Ukraine, 2017, No. 239, pp. 28-54 teach students to make high-quality financial decisions.

The second approach is historically associated with the research done in Economic Departments with the
main goal to derive the dynamic of asset prices from the behavior of individuals. In the same style,
Pompian (2012) proposes a similar approach to describe a variety of topics in behavioral finance. Micro
behavioral finance documents behavioral biases of individual investors and its implications for decision-
makers. It also tries to uncover the roots of behavioral biases and mechanisms by which they operate.
Similarly to the macro-normative stream of research in finance, macro behavioral finance is interested in
how the behavior of individual decision-makers determines and influences asset prices. However, unlike
the former, macro behavioral finance does not assume that individuals behave like Econs, rather, it is
based on the behavior of real humans described by micro behavioral finance. Inspired by this distinction,
this section starts with an account of the theoretical underpinnings of micro behavioral finance by
examining the difference between Humans and Econs. Then, the section turns to the most important
findings in the realm of macro behavioral finance, which are mostly related to the so-called financial
market "anomalies" and the question of financial market efficiency