Presentation Slides for 'Investor Psychology and Security Market Under and Overreactions'

  title={Presentation Slides for 'Investor Psychology and Security Market Under and Overreactions'},
  author={Kent D. Daniel and David Hirshleifer and Avanidhar Subrahmanyam},
  journal={CSN: Business (Topic)},
We propose a theory of securities market under- and overreactions based on two well-known psychological biases: investor overconfidence about the precision of private information; and biased self-attribution, which causes asymmetric shifts in investors’ confidence as a function of their investment outcomes. We show that overconfidence implies negative long-lag autocorrelations, excess volatility, and, when managerial actions are correlated with stock mispricing, public-event-based return… 
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