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Persistent link: https://www.econbiz.de/10013428441
Many practitioners point out that the speculative profits of institutional traders arc eroded by the difficulty in gauging the price impact of their trades. In this paper. we develop a model of strategic trading where speculators face such a dilemma because of incomplete information about...
Persistent link: https://www.econbiz.de/10010440966
Absentmindedness is a special case of imperfect recall which according to Piccione and Rubinstein (1997a) leads to time inconsistencies. Aumann, Hart and Perry (1997a) question their argument and show how dynamic inconsistencies can be resolved. The present paper explores this issue from a...
Persistent link: https://www.econbiz.de/10003980493
I experimentally examine whether feedback about others' choices provides an anchor for decision-making under ambiguity. In a between-subjects design I vary whether subjects learn choices made individually by a "peer" in a first part when facing the same task a second time, and whether prospects...
Persistent link: https://www.econbiz.de/10010364762
Quantum decision theory (QDT) is a recently developed theory of decision making based on the mathematics of Hilbert spaces, a framework known in physics for its application to quantum mechanics. This framework formalizes the concept of uncertainty and other effects that are particularly manifest...
Persistent link: https://www.econbiz.de/10011514496
This paper proposes a model of attention allocation in decision-making. Attention has various definitions across the literature. Here, I understand attention as selecting information for costly processing. The paper investigates how an agent rationally allocates attention. The resulting...
Persistent link: https://www.econbiz.de/10011514816
We propose a model of instrumental belief choice under loss aversion. When new information arrives, an agent is prompted to abandon her prior. However, potential posteriors may induce her to take actions that generate a lower utility in some states than actions induced by her prior. These losses...
Persistent link: https://www.econbiz.de/10011557745
An agent wants to derive her belief over outcomes based on past observations collected in her database (memory). There is well establish evidence in the psychology and marketing literature that agents consistently fail (or choose not) to process all available information. An agent might be...
Persistent link: https://www.econbiz.de/10010403098
This article examines the link between uncertainty and analysts' reaction to earnings announcements for a sample of European firms during the period 1997-2007. In the same way as Daniel, Hirshleifer and Subrahmanyam (1998), we posit that overconfidence leads to an overreaction to private...
Persistent link: https://www.econbiz.de/10013059109
Perceived urgency and regret are common in many sequential search processes; for example, sellers often pressure buyers in search of the best offer, both time-wise and in terms of potential regret of forgoing unique purchasing opportunities. Theoretically, these strategies result in anticipated...
Persistent link: https://www.econbiz.de/10013224079