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Full-Text Articles in Behavioral Economics
How Do People Update Beliefs About Themselves Under Risk, Zhongyi Tang
How Do People Update Beliefs About Themselves Under Risk, Zhongyi Tang
Senior Theses and Projects
This paper aims to understand whether people follow Bayes’ Rule to update beliefs about important attributes they do not know much about. If they fail to Bayesian update their beliefs, the paper investigates how the external environment, good news versus bad news, risk levels, and the imperfect memory factor contribute to the departure from Bayes Rule. An experimental approach is used to recreate a simplified entrepreneurship scenario in the laboratory environment which was implemented through oTree. 249 participants were recruited through Amazon’s Mechanical Turk. Findings in this paper suggest that people with Low ability have tendency toward overconfidence which persists …
The Impact Of Earnings Announcement Surprise On Stock Prices, Jiayi Huang
The Impact Of Earnings Announcement Surprise On Stock Prices, Jiayi Huang
Senior Theses and Projects
The 2008 financial crisis and recent volatility in global markets have provided important motivations to better understand the functioning of equity markets, since stock market crashes can trigger severe recessions through wealth and balance-sheet effects. Against efficient market theory, the literature has found much evidence that stock price movements seem unrelated to expected future movements in corporate fundamentals. This thesis investigates the impact of earnings announcement surprise on stock prices and contributes to the existing literature by examining the impact’s dependency on various factors (the P/E ratio, the output gap, whether the forecast error is positive or negative, and the …