Using data generated from laboratory experiments, we test and compare the empirical accuracy of two models that focus on judgment errors associated with processing information from random sequences. We test for regime-shifting beliefs of the type theorized in Barberis, Shleifer, and Vishny...

A recent paper by Bloomfield and Hales (2002) reports results of laboratory experiments with MBA-student participants that support the existence of regime-shifting beliefs of the type theorized by Barberis, Shleifer, and Vishny (1998). Specifically, they find a strong tendency for subjects to...