This paper offers a model in which securities prices reflect both risk and misperceptions of firms' prospects. Our premise is that individuals are overconfident about their ability to evaluate -securities, and hence overestimate the precision of their private information signals. The model is consistent with several anomalous findings regarding the cross-section of equity returns.
This paper offers a model in which securities prices reflect both risk and misperceptions of firms' prospects. Our premise is that individuals are overconfident about their ability to evaluate -securities, and hence overestimate the precision of their private information signals. The model is consistent with several anomalous findings regarding the cross-section of equity returns.
This paper offers a model in which securities prices reflect both risk and misperceptions of firms' prospects. Our premise is that individuals are overconfident about their ability to evaluate -securities, and hence overestimate the precision of their private information signals. The model is consistent with several anomalous findings regarding the cross-section of equity returns.