Recent Developments on Heterogeneous Beliefs and Adaptive Behaviour of Financial Markets

Heterogeneity and interacting among boundedly rational agents have received an increasing attention in the finance and economics literature. Recent developments on the role of heterogeneous beliefs on asset pricing and the adaptive behaviour of financial markets shed light into the complex behaviour of financial markets and provides some explanations of certain market behaviour and anomalies. This paper surveys these developments, of which the author and several coauthors have contributed in several papers, and discusses the extent to which they can address market anomalies, complexity, and stylized facts in financial markets.