| Description |
1 online resource (30 pages) |
| Series |
IMF Working Papers, 2227-8885 ; Working Paper No. 05/9 |
|
IMF Working Papers ; Working Paper no. 05/9
|
| Contents |
Contents -- I. INTRODUCTION -- II. THE ASSET PRICING MODEL -- III. ASSET PRICING WITH COGNITIVE DISSONANCE -- IV. HOW INFORMATION AFFECTS ASSET PRICES -- V. THE LESS INFORMATIVE THE SIGNAL, THE LARGER THE MISPRICING -- VI. CONCLUDING REMARKS -- References |
| Summary |
The behavior of equity prices is analyzed in a general equilibrium model where agents have preferences not only over consumption but also (implicitly) over their beliefs. To alleviate cognitive dissonance, investors endogenously choose to ignore information that conflicts too much with their ex ante expectations. Depending on the new information that is released, systematic overvaluation and undervaluation of equity prices arise, as well as too much and too little equity price volatility. The distortion in the asset pricing process is closely related to the precision of the information |
| Notes |
Available in PDF, ePUB, and Mobi formats on the Internet |
|
English |
| Subject |
Electronic books
|
| Form |
Electronic book
|
| Author |
Eckwert, Bernhard
|
|
Drees, Burkhard
|
|
International Monetary Fund.
|
| ISBN |
1451905645 |
|
9781451905649 |
|
1462399282 |
|
9781462399284 |
|
1452732019 |
|
9781452732015 |
|
128210988X |
|
9781282109889 |
|
9786613802774 |
|
6613802778 |
|
