BeFi meets DeFi: A behavioral finance approach to decentralized finance asset pricing

This systematic literature review summarizes the extant research in the Behavioral Finance (BeFi) and digital asset spaces to understand better the interactions of behavioral effects on the pricing of assets constructed, enabled, and exchanged in Decentralized Finance (DeFi) markets. We find that as...

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Bibliographic Details
Published inResearch in international business and finance Vol. 65; p. 101939
Main Authors Bennett, Donyetta, Mekelburg, Erik, Williams, T.H.
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.04.2023
Subjects
Behavioral finance
Biases
Cryptocurrencies
Decentralized finance
Heuristics
Investor attention
Investor sentiment
Cryptocurrencies
Biases
Heuristics
Investor sentiment
Behavioral finance
Investor attention
Decentralized finance
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Summary:This systematic literature review summarizes the extant research in the Behavioral Finance (BeFi) and digital asset spaces to understand better the interactions of behavioral effects on the pricing of assets constructed, enabled, and exchanged in Decentralized Finance (DeFi) markets. We find that asset pricing in these rapidly evolving markets is better explained through BeFi than through traditional finance (TradFi) theory. Investor attention, sentiment, heuristics and biases, and network effects interact to form a highly volatile and dynamic market. We offer a deterministic research framework with propositions for future research. We further provide investors with a theoretically and empirically supported structure to better inform their decisions through an understanding of BeFi applications to DeFi. [Display omitted]
ISSN:0275-5319
1878-3384
DOI:10.1016/j.ribaf.2023.101939