Schizophrenic Representative Investors

Schizophrenic Representative Investors

Representative investors whose behavior is modeled by a deterministic finite automaton generate complexity both in the time series of each asset and in the cross-sectional correlation when the rule governing their behavior is schizophrenic, meaning the investor holds multiple seemingly contradictory beliefs simultaneously, either by switching between two different rules at each time step, or co...

Protecting investors

On December 15, 2010, after 11 months of legal standoff, the Swiss corporation Novartis finally closed a deal to acquire the remaining shares of eye-care company Alcon from minority shareholders. Why did it take almost a year? The acquisition had become a relatedparty transaction after Novartis purchased a 25% stake from then majority shareholder Nestlé and nominated some of its own directors t...

Acute Schizophrenic Episodes—are They Schizophrenic?

The diagnosis and nosology of Psychotic disorders have been matters of interest and debate since Kraeplin 's original delineation of Manic depressive illness and schizophrenia. Although in the past, it was largely of academic interset, the accurate classification of these disorders has assumed greater importance with the availability of newer and more specific treatments for the psychoses. Abou...

Investors and Management Practice:

Herding Among Individual Investors

The conjecture that investor sentiment leads important groups of investors to act similarly and thereby affect prices is an important ingredient of models of noise trading and style investing. In contrast to Lakonishok et al. (1992), who find only weak evidence of herding among institutional investors and conjecture that retail investors will herd even less, we document that a sample of over 30...