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Investor Sentiments

  • Sergei Izmalkov
  • Muhamet Yildiz

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 strategic 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. (JEL C73, D82, D83, G11)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mic.2.1.21
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Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

Volume (Year): 2 (2010)
Issue (Month): 1 (February)
Pages: 21-38

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Handle: RePEc:aea:aejmic:v:2:y:2010:i:1:p:21-38
Note: DOI: 10.1257/mic.2.1.21
Contact details of provider: Web page: https://www.aeaweb.org/aej-micro
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  17. Morris, Stephen & Shin, Hyun Song & Yildiz, Muhamet, 2016. "Common belief foundations of global games," Journal of Economic Theory, Elsevier, vol. 163(C), pages 826-848.
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