We propose a theory of securities market under‐and overreactions based on two well‐
known psychological biases: investor overconfidence about the precision of private …

The basic paradigm of asset pricing is in vibrant flux. The purely rational approach is being
subsumed by a broader approach based upon the psychology of investors. In this approach …

This paper examines individual decision making when decisions reflect on people's ability to
learn. We address this problem in the context of a manager making investment decisions on …

To improve forecasting accuracy, combine forecasts derived from methods that differ
substantially and draw from different sources of information. When feasible, use five or more …

Penguins jumping off a cliff, economic forecasters and financial advisors speculating against
a currency, and farmers using traditional methods in India are all practising social learning …

This paper explains why seemingly irrational overconfident behavior can persist. Information
aggregation is poor in groups in which most individuals herd. By ignoring the herd, the …

We propose a theory based on investor overconfidence and biased self-attribution to explain
several of the securities returns patterns that seem anomalous from the perspective of …

Recently, several behavioral finance models based on the overconfidence hypothesis have
been proposed to explain anomalous findings, including a short-term continuation …

We develop and compare two theories of professional forecasters' strategic behavior. The
first theory, reputational cheap talk, posits that forecasters endeavor to convince the market …

This paper documents the presence of systematic bias in the real GDP and inflation
forecasts of private sector forecasters in the G7 economies in the years 1990–2005. The …