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Bubble Investors: What Were They Thinking?

  • Ravi Dhar
  • William Goetzmann

Abstract: A variety of models have been proposed to explain the rise and fall of stocks prices in the U.S. around the turn of the millennium. Many models focus on behavioral explanations in which and investor beliefs about their own capabilities and the efficiency of market prices play a role. In this paper we provide empirical evidence on these beliefs. We surveyed a large sample of investors who bought stock in a telecommunications company at least once in the 1999-2000 period. We solicited their views on the efficiency of the stock market, and the basis for their personal trading decisions. A significant fraction appear to hold beliefs inconsistent with various implications of the efficient market hypothesis. Their motives for trade are based upon a belief in the value of

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File URL: http://icfpub.som.yale.edu/publications/2494
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Paper provided by Yale School of Management in its series Yale School of Management Working Papers with number ysm446.

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Date of creation: 01 Mar 2005
Date of revision: 01 Aug 2006
Handle: RePEc:ysm:somwrk:ysm446
Contact details of provider: Web page: http://icf.som.yale.edu/

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