2. Robert James Shiller (born March 29, 1946) is an American economist (Nobel
Laureate in 2013), academic, and best-selling author.
As of 2019, he serves as a Sterling Professor of Economics at Yale University and is a
fellow at the Yale School of Management's International Center for Finance.
Shiller has been a research associate of the National Bureau of Economic
Research (NBER) since 1980, was vice president of the American Economic
Association in 2005, its president-elect for 2016, and president of the Eastern
Economic Association for 2006–2007.
He is also the co-founder and chief economist of the investment management firm
Macro Markets LLC.
3. Shiller, a Yale economist, is a leading scholar within behavioral finance.
In 2013, he was awarded the Nobel Prize in Economic Sciences for his central
contributions to the field.
In particular, Shiller has spent years critiquing the notion of efficient markets as
advanced by e.g. Eugene Fama, a co-recipient of the 2013 Nobel Prize.
Shiller’s alternative to Fama has two dimensions.
One is empirical, in that Shiller has argued that stock prices, to take one example, do not
conform to efficient market expectations.
Another dimension of Shiller’s work is theoretical: he has drawn considerably on
particular psychological and sociological traditions when developing a behavioral
alternative to the efficient market hypothesis.
Indeed, in Shiller’s view, behavioral finance may be defined as ‘finance from a broader
social science perspective, including psychology and sociology’ (2003: 83), and explicit
inspiration from scholars such as Emile Durkheim, Robert K. Merton, and Max Weber
can be identified in many of his writings.
4. The use of psychological and sociological findings is particularly visible in Shiller’s
seminal article from 1984: ‘Stock Prices and Social Dynamics’ (Shiller, 1984), which is
that part of his work which has received the most attention from the Committee of the
Royal Swedish Academy of Sciences in their motivation for the 2013 prize.
In the 1984 article, Shiller puts forward his theoretical programmed in its most elaborate
form.
Specifically, he argues that financial markets should be seen as deeply embedded in
mass-psychological dynamics: ‘mass psychology may well be the prominent cause of
movements in the price of the aggregate stock market’, he asserts (1984: 459).
In the discussion of Shiller, the focus particularly is on the ways in which he
substantiates this assertion.
It demonstrate, firstly, that Shiller is inspired by the sociological tradition of crowd and
mass psychology, including an interest in the notion of suggestion (prominent in late-
nineteenth-century sociology and psychology).
Moreover, it also show that Shiller harks back to particular experiments from social
5. A word on Shiller’s use of social-psychology experiments is pertinent here. Much of
the behavioural finance literature, and especially Shiller, deploys very particular
sociological and psychological findings to make rather grand statements.