Study on the behavioral pricing model of financial options based on multiple mental accounts

This paper examines a behavioral pricing model of financial options in the mental accounts described secondary financial markets. Arbitrage free option pricing hypotheses are tested based on behavioral portfolio theory, which emphasize the importance of trading in determining the value of a security. The temporal evolution of isolated markets is unitary in the Hilbert space of market states. Linear -operators representing basic financial transactions are constructed and simple model Hamiltonians that generate the temporal evolution are proposed. With a: controlled experiment on the behavioral pricing of financial options, simulation results show that unexploited arbitrage opportunities persist even with considerable experience. Investors do not seem to make the connections between the different investment possibilities.