Advanced Search
MyIDEAS: Login

Equilibrium with divergence of opinion

Contents:

Author Info

  • Miller, Edward M.

    (University of New Orleans)

Registered author(s):

    Abstract

    Because the less informed incorrectly estimate asset returns, they anticipate higher returns from their risky investments. They thus over-invest in risky securities. They are rewarded by higher total portfolio returns. Too high a proportion of less informed investors lowers the return on risky assets. Equilibrium requires that the less informed’s rate of return equal the informed’s. The less informed control a stable equilibrium percentage of total wealth. Because an individual’s recent investment experience correlates with his terminal wealth, learning need not reduce the less informed’s risky asset exposure. Implications exist for the slope of the return versus systematic risk curve.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://louisdl.louislibraries.org/cgi-bin/showfile.exe?CISOROOT=/EFW&CISOPTR=17
    Our checks indicate that this address may not be valid because: 404 Page not found.. If this is indeed the case, please notify (Janet Murphy Crane)
    Download Restriction: no

    Bibliographic Info

    Paper provided by University of New Orleans, Department of Economics and Finance in its series Working Papers with number 1999-17.

    as in new window
    Length: 29 pages
    Date of creation: 1999
    Date of revision:
    Handle: RePEc:uno:wpaper:1999-17

    Contact details of provider:
    Postal: New Orleans, Louisiana 70148
    Phone: (504) 280-6485
    Email:
    Web page: http://www.uno.edu/~coba/econ/index.html
    More information through EDIRC

    Related research

    Keywords: High-risk securities; Investment strategies;

    Find related papers by JEL classification:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:uno:wpaper:1999-17. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Janet Murphy Crane).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.