Chapter 1. Thought and Behavior Contagion in Capital Markets

  1. Introduction 2
  2. Sources of Behavioral Convergence 5
  3. Rational Learning and Information Cascades: Basic Implications 7
  4. What Is Communicated or Observed? 9
    1. Observation of Past Actions Only 10
    2. Observation of Consequences of Past Actions 15
    3. Conversation, Media, and Advertising 16
  5. Psychological Bias 17
  6. Reputation, Contracts, and Herding 18
  7. Security Analysis 20
    1. Investigative Herding 20
    2. Herd Behavior by Stock Analysts and Other Forecasters 21
  8. Herd Behavior and Cascades in Security Trading 24
    1. Evidence on Herding in Securities Trades 24
    2. Financial Market Runs and Contagion 27
    3. Exploiting Herding and Cascades 28
  9. Markets, Equilibrium Prices, and Bubbles 29
  10. Cascades and Herding in Firm Behavior ...

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