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This study investigates the role of financial market uncertainty in institutional herding and its impact on stock … prices. We show that financial market uncertainty is a determinant of institutional herding. Fund managers tend to follow the … trades of other managers more frequently during high uncertainty periods than low uncertainty periods. We find that herding …
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A continuum of homogeneous rational agents choose between two competing technologies. Agents observe a private signal and sample others' previous choices. Signals have an aggregate component of uncertainty, so aggregate behavior does not necessarily reflect the true state of nature. Nonetheless,...
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Political uncertainty is a key determinant of investment decisions. Specifically, the uncertainty that surrounds government policy makes beliefs noisier and depresses stock prices. In this paper, we explore whether institutional investors "herd", i.e., mimic each other's trades, in response to...
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