Asset Mispricing Due to Cognitive Dissonance /

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...

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Bibliografske podrobnosti
Glavni avtor: Eckwert, Bernhard
Drugi avtorji: Drees, Burkhard
Format: Revija
Jezik:English
Izdano: Washington, D.C. : International Monetary Fund, 2005.
Serija:IMF Working Papers; Working Paper ; No. 2005/009
Online dostop:Full text available on IMF
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490 1 |a IMF Working Papers 
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500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
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520 3 |a 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. 
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700 1 |a Drees, Burkhard. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2005/009 
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