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Coordinated Investing with Feedback and Learning

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  • David Goldbaum

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Abstract

Investors select how to distrubute funds between a number of projects. This paper departs from the standard financial market model by endogenizing the intrinsic value of the assets to be dependend upon the amount of funding they attract. Investment strategies based on fundamental and a momentum strategy are compared. Both strategies produce herding characteristics. For the fundamental strategy herding is optimal. The momentum strategy can result in suboptimal economic development, but can also produces greater success for the individual investors utilizing it.

Suggested Citation

  • David Goldbaum, 2004. "Coordinated Investing with Feedback and Learning," Working Papers Rutgers University, Newark 2004-008, Department of Economics, Rutgers University, Newark.
  • Handle: RePEc:run:wpaper:2004-008
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    File URL: http://www.rutgers-newark.rutgers.edu/econnwk/workingpapers/2004-008.pdf
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    References listed on IDEAS

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    Cited by:

    1. Demirer, Rıza & Kutan, Ali M. & Zhang, Huacheng, 2014. "Do ADR investors herd?: Evidence from advanced and emerging markets," International Review of Economics & Finance, Elsevier, vol. 30(C), pages 138-148.
    2. Demirer, Riza & Kutan, Ali M. & Chen, Chun-Da, 2010. "Do investors herd in emerging stock markets?: Evidence from the Taiwanese market," Journal of Economic Behavior & Organization, Elsevier, vol. 76(2), pages 283-295, November.

    More about this item

    Keywords

    Learning; Investment; Growth; Agent-based Computational Economics;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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