For two periods an expert E announces his forecast of the state to a decision-maker D who chooses action. They disagree about the precision of the probability assessments. At the end of period 1 the state is observed. In the last period E makes announcements more extreme than his forecasts....

We examine the relation between the social ties between firms' headquarters locations and co-movements between their fundamentals and stock returns. Our evidence indicates that firms in the same industry with socially connected locations exhibit co-movement in fundamentals and stock returns that...