General Introduction

Within the field of capital market research, two diametrically opposed conceptions continue to be prevailing: The efficient market hypothesis by Fama (1970) on the one hand and the behavioral finance approach by Shiller (2003) on the other hand. According to Fama (1970), capital markets are efficient in a sense that current prices of securities incorporate all information available up to that point in time. Consequently, following Fama’s reasoning, there exist no possibilities to gain riskless profits by exploiting mispricings (so-called arbitrage) (Fama, 1970). Shiller (2003), in contrast, puts forward the claim that markets tend to behave irrationally, implying that there indeed exist possibilities to exploit mispricings.