Shleifer, Andrei; Gennaioli, Nicola; Vishny, Robert - National Bureau of Economic Research (NBER) - 2015
We model a financial market in which investor beliefs are shaped by representativeness. Investors overreact to a series of good news, because such a series is representative of a good state. A few bad news do not change investor minds because the good state is still representative, but enough...