Surprise

About: Surprise is a research topic. Over the lifetime, 4371 publications have been published within this topic receiving 99386 citations.

Recognition and environmental context: The effect of testing by phone

Abstract: Many experiments have shown that recognition memory is relatively unaffected by changes in environmental testing context. In the experiment reported in this paper, subjects studied a list of words in the laboratory and were tested by surprise by phone when they were at home. The results showed a significant impairment in recognition, relative to recognition by controls tested in the laboratory. This context effect seems to be related to the difficulty that subjects experienced in mentally reinstating the study context.

COVID-19 – reflections on the surprise of both an expected and unexpected event

Abstract: Aim: This paper reflects on the COVID-19 epidemic from the perspective of small probabilities and the difficulty of predicting similar events. Against the background of basic economic principles, the importance of the precautionary principle for crisis management is discussed, as well as potential consequences of this epidemic. Findings: The authors argue that whilst the epidemic as such was unexpected, in future countries should be prepared for such stochastic events to happen. This requires a precautionary approach. When society is not prepared for such a calamity, or waits too long to implement measures to deal with it, the social and economic costs may be very high – much higher than ‘hedging bets’ and losing. The article reflects on different issues which are meant for further discussion on unpredictable future threats. One important issue is the uncertainty created by this event. This increases the likeliness that something unexpected can appear in the near future, creating the need for research and discussion on public and government responses to these events. Being aware of such challenges increases the likeliness of society and people to be prepared for such developments. It is concluded that the current crisis brings forward the question whether the current political-economic system and globalization makes future pandemics more likely, and whether a radical change towards a more locally oriented economy provides solutions that minimize the likelihood or frequency of future pandemics.

Surprise Volume and Heteroskedasticity in Equity Market Returns

Abstract: Heteroskedasticity in returns may be explainable by trading volume. We use different volume variables, including surprise volume - i.e. unexpected above-average trading activity - which is derived from uncorrelated volume innovations. Assuming weakly exogenous volume, we extend the Lamoureux and Lastrapes (1990) model by an asymmetric GARCH in-mean specification following Glosten et al. (1993). Model estimation for the U.S. as well as six large equity markets shows that surprise volume provides superior model fit and helps to explain volatility persistence as well as excess kurtosis. Surprise volume reveals a significant positive market risk premium, asymmetry, and a surprise volume effect in conditional variance. The findings suggest that, e.g., a surprise volume shock (breakdown) - i.e. large (small) contemporaneous and small (large) lagged surprise volume - relates to increased (decreased) conditional market variance and return.