Journal ArticleDOI
III. Some causes and consequences of dependence and independence in the stock market
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TLDR
In this article, the authors argue that the price of a stock is an aggregate opinion, the resultant of the opinions and decisions of a community of investors, which can generate the kind of statistical dependence characteristic of non-random walks.Abstract:
The fact that there are times when market movement is random and times when it is not is interpreted in terms of the hypothesis that the price of a stock is an aggregate opinion — the resultant of the opinions and decisions of a community of investors. Price, like any other opinion, will be most vulnerable to social and other sources of influence during times of uncertainty, an aggregate psychological state which can generate the kind of statistical dependence characteristic of non-random walks. Ramifications of this hypothesis are explored in a variety of stock market behaviors, such as the effect of tips, the impact of runs on trading volume during rising and falling markets, and the like.read more
Citations
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Bubbles and fads in asset prices
TL;DR: In this paper, the authors consider the possibility that asset prices might deviate from intrinsic values based on market fundamentals and consider three broad categories of theories: growing bubbles, fads and information bubbles.
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Strategic Herding Behavior in Peer-to-Peer Loan Auctions
TL;DR: In this paper, the authors studied the role of strategic herding in online peer-to-peer loan auctions on Prosper.com and found a positive association between herding behavior and its subsequent performance.
Journal ArticleDOI
Strategic Herding Behavior in Peer-to-Peer Loan Auctions
TL;DR: In this article, the authors studied the role of strategic herding in online peer-to-peer loan auctions on Prosper.com and found a positive association between herding behavior and its subsequent performance.
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The Psychology of Financial Decision-Making: Applications to Trading, Dealing, and Investment Analysis
TL;DR: In this paper, the authors identify potential applications of experimental and organizational psychology to improve the efficiency of financial institutions and identify important questions for the financial markets to consider if they are serious about improving managerial practices.
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The rationality of prices and volume in experimental markets
TL;DR: In this article, market experiments designed to test whether individual errors are reduced by markets generally indicate that errors do make prices or trading volume somewhat irrational, and subjects do not ignore their own information when making forecasts of the forecasts of others.
References
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Journal ArticleDOI
The Adjustment of Stock Prices to New Information
TL;DR: In this paper, the authors examine the process by which common stock prices adjust to the information (if any) that is implicit in a stock split and show that the independence of successive price changes is consistent with a market that adjusts rapidly to new information.
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Risk perception in psychology and economics
TL;DR: In economics, the concept of rationality has been applied to a world in which time and uncertainty are real as mentioned in this paper, and among its most important manifestations have been criteria for consistency in allocation over time, the expected utility hypothesis of behavior under uncertainty, and what may be termed the Bayesian hypothesis for learning, that is the consistent use of conditional probabilities for changing beliefs on the basis of new information.