#analyst-notes #market-efficency
Information cascading is defined as a situation in which an individual imitates the trades of other market participants and completely disregards his or her own private information. A related concept is
herding, which is clustered trading that may or may not be based on information. Some researchers argue that institutional investors trade together because they receive correlated private information or infer private information from previous trades, and institutional herding helps prices to more quickly reflect market information and improve market efficiency. The result is that trading does not incorporate information and prices can move away from fundamentals.
Some researchers argue that information cascades help promote market efficiency.
If you want to change selection, open document below and click on "Move attachment"
Subject 4. Behavioral financeeir ability to outperform the market. Most fail to do so, however.
Other behavior theories include representativeness, gambler's fallacy, mental accounting, etc.
Information Cascades
<span>Information cascading is defined as a situation in which an individual imitates the trades of other market participants and completely disregards his or her own private information. A related concept is herding, which is clustered trading that may or may not be based on information. Some researchers argue that institutional investors trade together because they receive correlated private information or infer private information from previous trades, and institutional herding helps prices to more quickly reflect market information and improve market efficiency. The result is that trading does not incorporate information and prices can move away from fundamentals.
Some researchers argue that information cascades help promote market efficiency.<span><body><html> Summary
| status | not read | | reprioritisations | |
|---|
| last reprioritisation on | | | suggested re-reading day | |
|---|
| started reading on | | | finished reading on | |
|---|
Details