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Calandro, Jr., Joseph - 2017

“Rationality” is a term that comes up often during investment conversations, and yet it has not been definitively … defined. For example, economists and investors each use and define the term rationality differently. The objective of this … note is to profile three general definitions of the term “rationality,” and then to demonstrate how one of these …

Persistent link: https://www.econbiz.de/10012955676

Why did so many people make so many ex post bad decisions? The causes of the foreclosure crisis

Foote, Christopher L.; Gerardi, Kristopher S.; Willen, … - 2012

We present 12 facts about the mortgage crisis. We argue that the facts refute the popular story that the crisis resulted from finance industry insiders deceiving uninformed mortgage borrowers and investors. Instead, we argue that borrowers and investors made decisions that were rational and...

Persistent link: https://www.econbiz.de/10010292274

Emotional State and Market Behavior

Breaban, Adriana - 2013

We consider the relationship between the emotional state of traders and market prices. We create asset markets with the structure first studied by Smith, Suchanek and Williams (1988), which is known to generate price bubbles and crashes. We analyze participants' facial expressions with...

Persistent link: https://www.econbiz.de/10013080780

Why Did so Many People Make so Many Ex Post Bad Decisions? The Causes of the Foreclosure Crisis

Foote, Christopher L. - 2015

Persistent link: https://www.econbiz.de/10013032950

Range-Based Expectations

Zhu, Natalie - 2020

I propose and document empirically that investors form “range-based” expectations – expectations that are influenced by an asset's past trading range – and that these beliefs affect trading behavior and asset prices. I find that, if an asset's price is high (low) relative to its 52- week...

Persistent link: https://www.econbiz.de/10012846759

A Retrieved-Context Theory of Financial Decisions

Wachter, Jessica A. - 2020

Studies of human memory indicate that features of an event evoke memories of prior associated contextual states, which in turn become associated with the current event's features. This mechanism allows the remote past to influence the present, even as agents gradually update their beliefs about...

Persistent link: https://www.econbiz.de/10012850165

Speculation Sentiment

Davies, Shaun - 2020

I exploit the leveraged exchange-traded funds' (ETFs) primary market to measure aggregate, uninformed, gambling-like demand, that is, speculation sentiment. The leveraged ETFs' primary market is a novel setting that provides observable arbitrage activity attributed to correcting mispricing...

Persistent link: https://www.econbiz.de/10012853530

The Impact of Conventional and Unconventional Monetary Policy on Expectations and Sentiment

Galariotis, Emilios C. - 2017

This paper offers, for the first time, evidence on the effect of ECB's conventional and unconventional monetary policy on economic expectations in Euro-area countries during the US and EU crisis. We employ a range of research methodologies (PVAR, QVAR, FAVAR) in a sample of nine Eurozone...

Persistent link: https://www.econbiz.de/10012968854

The Qualitative Expectations Hypothesis : Model Ambiguity, Consistent Representations of Market Forecasts, and Sentiment

Frydman, Roman - 2017

We introduce the Qualitative Expectations Hypothesis (QEH) as a new approach to modeling macroeconomic and Financial outcomes. Building on John Muth's seminal insight underpinning the Rational Expectations Hypothesis (REH), QEH represents the market's forecasts to be consistent with the...

Persistent link: https://www.econbiz.de/10012953086

The Qualitative Expectations Hypothesis : Model Ambiguity, Consistent Representations of Market Forecasts, and Sentiment

Frydman, Roman - 2017

Persistent link: https://www.econbiz.de/10012953166

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