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Speculative Trade and the Value of Public Information

Galanis, Spyros - 2020

In environments with expected utility, it has long been established that speculative trade cannot occur (Milgrom and Stokey), and that the value of public information is negative in economies with risk-sharing and no aggregate uncertainty (Hirshleifer, Schlee). We show that these results are...

Persistent link: https://www.econbiz.de/10012847287

Belief Updating with Misinformation

Wittrock, Lars; Strobel, Martin; Tsakas, Elias - 2023

Uncertain information is frequently confirmed or retracted after people have initially heard it. A large existing literature has studied how people change their beliefs in response to new information, however, how people react to information about previous information is still unclear. We...

Persistent link: https://www.econbiz.de/10014261584

On the evolutionary stability of the sentiment investor

Antico, Andrea; Bottazzi, Giulio; Giachini, Daniele - 2022

The behavioural finance literature attributes the persistent market misvaluation observed in real data to the presence of deviations from rational thinking of the actors involved. Cognitive biases and the use of simple heuristics can be described using expected utility maximising agents that...

Persistent link: https://www.econbiz.de/10013161531

Decomposing the disposition effect

Maier, Johannes K.; Fischer, Dominik Simon - 2021

We theoretically show that there is a fundamental disconnect between the disposition effect, i.e., investors’ tendency to sell winning assets too early and losing assets too late, and its common empirical measure, namely a positive difference between the proportion of gains and losses...

Persistent link: https://www.econbiz.de/10012628736

Do Investors Buy What They Know? Product Market Choices and Investment Decisions

Keloharju, Matti - 2014

This paper shows individuals' product market choices influence their investment decisions. Using microdata from the …

Persistent link: https://www.econbiz.de/10013069336

The Effects of Investors’ Information Processing Limitations When Incorporating Return on Assets into Their Investment Decisions

Hewitt, Max - 2017

Research suggests that investors fail to fully process changes in return on assets due to their incomplete processing of changes in asset turnover. We propose that investors do not fully process changes in return on assets—stemming from changes in asset turnover—because of their (1) fixation...

Persistent link: https://www.econbiz.de/10012965083

Belief Updating and Investment Decisions : The Impact of Good or Bad News Varies With Prior Returns

Trutmann, Kevin; Heinke, Steve; Rieskamp, Jörg - 2022

favorability of the news, leading to a anomalies in investment decisions. We propose a context-sensitive reinforcement learning …

Persistent link: https://www.econbiz.de/10013491946

Actual and perceived financial sophistication and wealth accumulation : the role of education and gender

Bannier, Christina E.; Neubert, Milena - 2016

This study examines the role of actual and perceived financial sophistication (i.e., financial literacy and confidence … in formal education, whereas confidence increases in education for men but decreases for women, we observe that women …) in education for women (men). Confidence, however, supports only highly-educated men's wealth. When considering different …

Persistent link: https://www.econbiz.de/10011417255

Investment Timing with Costly Search for Financing

Antill, Samuel - 2017

I develop a dynamic model of investment timing in which firms must first choose when to search for external financing …. Search is costly and the arrival of investors is uncertain, leading to delay in financing and investment. Depending on … parameters, my model can predict simultaneous financing and investment or early financing prior to investment. Additionally, the …

Persistent link: https://www.econbiz.de/10012952427

Management Forecast Quality and Capital Investment Decisions

Goodman, Theodore H. - 2014

Corporate investment decisions require managers to forecast expected future cash flows from potential investments … infer the quality of their corporate investment decisions. Relying on the intuition that managers draw on similar skills … when generating external earnings forecasts and internal payoff forecasts for their investment decisions, we predict that …

Persistent link: https://www.econbiz.de/10013063410