Behavior Based Manipulation: Theory and Prosecution Evidence*
نویسندگان
چکیده
If investors are not fully rational, what can smart money do? This paper provides an example in which smart money can strategically take advantage of investors’ behavioral biases and manipulate the price process to make profit. The paper considers three types of traders, behavior-driven investors who are less willing to sell losers than to sell winners (dispositional effect), arbitrageurs, and a manipulator who can influence asset prices. We show that, due to the investors’ behavioral biases and the limit of arbitrage, the manipulator can profit from a “pump-and-dump” trading strategy by accumulating the speculative asset while pushing the asset price up, and then selling the asset at high prices. Since nobody has private information, manipulation here is completely trade-based. The paper also endogenously derives several asset-pricing anomalies, including excess volatility, momentum and reversal. As an empirical test, the paper presents some empirical evidence from the U.S. SEC prosecution of “pump-and-dump” manipulation cases that are consistent with our model. JEL: G12, G18
منابع مشابه
Finite Element Simulation of Contact Mechanics of Cancer Cells in Manipulation Based on Atomic Force Microscopy
The theory of contact mechanics deals with stresses and deformations which arise when the surfaces of two solid bodies are brought into contact. In elastic deformation contact occurs over a finite area. A regular method for determining the dimensions of this area is Hertz Contact Model. Appearance of atomic force microscope results in introduction of Contact ...
متن کاملJurors' perceptions of adolescent sexual assault victims who have intellectual disabilities.
Children and adolescents with intellectual disabilities are especially likely to be sexually abused. Even so, their claims are not likely to be heard in court, possibly because people assume that jurors will not believe them. We tested this assumption in a mock-trial study in which 160 men and women watched videotaped excerpts from an actual trial. As predicted, when the 16-year-old sexual assa...
متن کاملعوامل مؤثر بر تولید اسناد سیاستی مبتنی بر شواهد در ستاد وزارت بهداشت، درمان و آموزش پزشکی
Introduction: Successful reduction in the gap between applied knowledge and pure knowledge, depends on the identification of factors affecting it .The objective of the study was to identify the barriers and facilitators to the development of evidence-based papers from the perspective of their producers at the Ministry of Health Care and Medical Education headquarter office. Methods: Qualitativ...
متن کاملDevelopment and Validating of a Quest for Predicting Nutrition Literacy Promoting Behavior Based on the Theory of Planned Behavior in Southern Iran, 2017
Background: The evidence suggests nutrition style as a key determinant of health. On the other hand, nutrition literacy is a key determinant of nutrition decisions and behaviors. This study aimed to develop and validate an inventory in order to predict nutrition literacy promoting behavior based on the theory of planned behavior (TPB) in the youth. Methods: In this cross-sectional study, 203 st...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
عنوان ژورنال:
دوره شماره
صفحات -
تاریخ انتشار 2004