One of the most fundamental concepts in finance is the efficient markets hypothesis. In case you are unfamiliar with the concept, here’s a bit of background: The efficient markets hypothesis has historically been one of the main cornerstones of academic finance research. Proposed by the University of Chicago’s Eugene Fama in the 1960′s, the general [...]
Entries Tagged as 'Buyer Beware'
On The Efficient Markets Hypothesis, Or, How Cats Are The New Monkeys With Dart Boards…
January 19th, 2013 · 1 Comment
Buyer Beware · Finance · Markets
Tags: Buyer Beware · Finance · Markets
The Fiscal Cliff And Chained CPI, Or Wile E. Coyote As Policy Maker…
December 13th, 2012 · 9 Comments
Buyer Beware · Macroeconomics · Policy
In retrospect, I suppose it was somewhat timely that I wrote an article last week about the Consumer Price Index as a measure of inflation. Specifically, I wrote about how the CPI can overstate increases in a household’s cost of living: The purpose of the Consumer Price Index makes it necessary to evaluate how well [...]
Tags: Buyer Beware · Macroeconomics · Policy
The Split Personality Of Behavioral Science, Grinch Edition…
December 12th, 2012 · 1 Comment
Behavioral Econ · Buyer Beware
On the first day of my behavioral economics course, I address the question of what sorts of people and organizations are interested in behavioral economics. The list I’ve come up with so far looks something like this: Researchers Policy Makers Marketers Finance Professionals Obviously, researchers are interested in behavioral economics because it’s their job (and [...]
Tags: Behavioral Econ · Buyer Beware
What My Students Have Been Learning, Overchoice And The Daily Show Edition…
November 25th, 2012 · 4 Comments
Behavioral Econ · Buyer Beware · Just For Fun
Probably like most instructors (at all levels), I wonder a lot of the time how much my students actually pay attention to anything that I say. (My students’ exam scores would indicate that, on average, they listen to about 75 percent of what I say.) Sometimes I’m dismayed at their reaction, as when I literally [...]
Tags: Behavioral Econ · Buyer Beware · Just For Fun
When Price As A Signal Of Quality Goes Awry…
August 8th, 2012 · 7 Comments
Behavioral Econ · Buyer Beware
It’s often true that high-quality goods have higher price tags, and there are a number of rational reasons why this could be the case- higher production cost, more limited supply, higher demand, etc. Higher demand, in turn, is rationally due to increased utility from consuming the high-quality product. It makes sense then, to some degree, [...]
Tags: Behavioral Econ · Buyer Beware