We present a new theory of asset pricing and portfolio choices under asymmetric reasoning, contrast the predictions with those under asymmetric information, and present experimental evidence in favor of our theory. The Efficient Markets Hypothesis and its formal foundation, the Rational...

Given a set of alternatives with multiple attributes, I characterize the set of preference profiles that are representable by weighted versions of a class of utility functions indexed by a parameter δ  0, where δ ≥ 1 corresponds to the set of Minkowski’s (<CitationRef CitationID="CR34">1886</CitationRef>) metric functions. In...</citationref>

Agents with cognitive limitations may compute the expected value of a risky asset incorrectly. If market prices reflect the probabilities of the payoff-relevant states, agents who compute the probabilities incorrectly encounter a market price that is inconsistent with their calculation. We test...

We present a theory and experimental evidence on pricing and portfolio choices under asymmetric reasoning. We show that under asymmetric reasoning, prices do not reflect all (types of) reasoning. Some agents who observe prices that cannot be reconciled with their reasoning switch from perceiving...