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Investor Sentiments

Article
Author/s: 
Sergei Izmalkov and Muhamet Yildiz
American Economic Journal: Microeconomics
Issue number: 
1
Year: 
2010
Journal pages: 
21-38
PDF [1]
We consider a general class of games that have been used to model many economic problems where players’ sentiments are believed to play an important role. Dropping the common-prior assumption, we identify the relevant notion of sentiments for strate-gic behavior in these games. This notion is tied to how likely a player thinks that some other player has a more optimistic outlook than himself when they obtain their private information. Under this notion, we show that sentiments have a profound effect on strategic outcomes–even with vanishing uncertainty.

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Links
[1] https://www.princeton.edu/economics/seminar-schedule-by-prog/behavioral-f08/pdf/izmalkovyildiz.pdf