A note on risk aversion and herd behavior in financial markets

We show that differences in market participants risk aversion can generate herd behavior in stock markets where assets are traded sequentially. This in turn prevents learning of market’s fundamentals. These results are obtained without introducing multidimensional uncertainty or transaction cost. Copyright Springer Science + Business Media, LLC 2006

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Year of publication:	2006
Authors:	Decamps, Jean-Paul ; Lovo, Stefano
Published in:	The Geneva Papers on Risk and Insurance Theory. - Springer, ISSN 0926-4957. - Vol. 31.2006, 1, p. 35-42
Publisher:	Springer
Subject:	Herd behavior \| Risk aversion

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

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