In a series of experiments, Bar-Hillel and Budescu (1995) failed to find a desirability bias in probability estimation. The World Cup soccer tournament (of 2002 and 2006) provided an opportunity to revisit the phenomenon, in a context where wishful thinking and desirability bias are notoriously...

This research illustrates the power of reputation, such as that embodied in brand names, demonstrating that names can enhance objective product efficacy. Study participants facing a glaring light were asked to read printed words as accurately and as quickly as they could, receiving compensation...

Empirical studies demonstrated that US baby boomers consumption and savings patterns have affected economic aggregates over the past decades, among them equity returns. Boomers’ retirement is expected to mitigate the demand for equities until 2050, but its impact varies with the specific...

Pro forma estimation of financial statements often builds on constant ratios to sales revenue. While constant ratios may be relevant for established firms operating in predictable industries, they yield noninformative and possibly misleading information when applied to new firms, and...

Asset pricing models with atomistic agents typically relax assumptions concerning rationality and/or homogenous information in order to track endogenous bubbles. In this model, identically informed rational agents hold a Perceived Law of Motion (PLM) for a single new technology asset at IPO, yet...

This paper presents an equity market where the value of a new technology is infrequently observable while the equity claim of the asset is continuously traded. We clear the stock market between two optimal asset allocation strategies, speculative vs. fundamental, adopted by risk-averse investors...

We develop closed-form expressions for the path and speed of stock price discovery in a utility-based CAPM with wealth effects. Two investors with uniquely bounded risk-preferences always apply opposite portfolio rebalancing trades. These trades determine the intra-period path and speed of price...