Brunnermeier, Markus K; Gollier, Christian; Parker, … - C.E.P.R. Discussion Papers - 2007
when investors hold beliefs that optimally balance these two incentives, portfolio holdings and asset prices match six … observed patterns: (i) because the cost of biased beliefs are typically second-order, investors typically hold biased … beliefs temper these biases, the utility cost of the lack of diversification are limited; (iii) because there is a …