There is a great quote at the start of this chapter. Meir Statman from Santa Clara University says: “People in standard finance are rational. People in behavioral finance are normal.” That one sentence pretty much captures the whole idea of this book.
Chapter 2 of Artificial Intelligence in Finance is technically labeled a “Preface,” but it does a lot more than set the stage. Hilpisch opens with a quote from Robert Shiller asking whether financial markets will ever become truly perfect, with every asset priced correctly. It is a big question. And honestly, the way the chapter frames AI in finance around that question is what makes it interesting.
This is a retelling of Chapter 1 (Introduction) from “Behavioral Finance for Private Banking” by Thorsten Hens, Enrico G. De Giorgi, and Kremena K. Bachmann (Wiley, 2018).