"Speculative Investor Behavior and Learning''

Preprint

preprint

Published in RePEc

Abstract

As traders learn about the true distribution of some asset's dividends, a speculative premium occurs as each trader anticipates the possibility of reselling the asset to another trader before complete learning has occurred. Small differences in prior beliefs lead to large speculative premiums during the learning process. This phenomenon helps explain a paradox concerning the pricing of initial public offerings. The result casts light on the significance of the common prior assumption in economic models. (This abstract was borrowed from another version of this item.)

Keywords

BEHAVIOR
MODELS
PRICING
CASTS
TRADER
RESELLING
DIVIDENDS
SPECULATIVE
ITEM
ASSET'S

All Related Versions

Version 1, RePEc

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