Blog Archives

Irrational reaction

Are financial markets efficient at factoring in relevant information? This has been the controversial question for many decades. Behavioral economics has found out that information efficiency is somewhat missing sometimes. Have markets read Italian banks’ financial statements? The late bout in volatility on Italian banks might as well be another

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Posted in Economics
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Misguiding intuitition on cognitive biases

A racket and a ball cost 11 euros and the racket costs 10 euros more than the ball. How much does the ball cost? If you’re one us it’s very likely you have jumped straight to the conclusion that the ball costs 1 euro. Alas, that is the wrong answer.

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Posted in Economics
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Speculation: a speculative quest

“We are pattern seekers, believers in a coherent world, in which regularities [...] appear not by accident but as a result of a mechanical causality or of someone’s intention. We do not expect to see regularity produced by a random process, and when we detect what appears to be a

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Posted in Economics
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Speed perception, credit correction

“You feel it in your guts. You don’t need to have a look at the speedometer to know which speed you’re driving at!”. During a short interview with a credit analyst I think this is an awesome revelation containing the core of what overconfidence leads to: systematic biases, as we

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Posted in Economics
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Behavioral finance: a primer on a quiz’s results (Italian)

Idiots exist, says L. Summers. For a brief introduction on behavioral finance download the Behavioral Finance primer.

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Posted in Economics, Whitepapers
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Risk-return inversion

During some training sessions, held between October 1 and October 16, 52 financial advisors were asked to rank their preferences on 9 listed stocks (Google, Apple, Exxon Mobil, Citigroup, Goldman-Sachs, Wal-Mart, Ford Motors, Toyota and Baidu) according to two criteria: expected risk and required return. Consistently with other researches we have

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Posted in Economics, R-stats
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A test of behavioral finance

Try to take this simple quiz (Italian only). If your birthday is between 1 and 15 choose this link or else (16 – end of month) this one.

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Posted in Economics
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