COMM 318 Chapter Notes - Chapter 6: Autocorrelation, Motivated Reasoning, Financial Statement
6 Apr 2016
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Intent enable beter predicions of this performance by means of a more informaion informaive system. If its going to be useful to investors, increased relevance must outweigh any reducion in reliability. Ineiciency and non-raional investor behaviour can be reduced by a measurement approach. Average investor behaviour may not correspond to the raional decision theory and investment models. Individuals may have limited atenion may not have the ime, inclinaion, or ability to process all available informaion o. Focus on readily available informaion aka the botom line and ignore the disclosures: may be bias in their reacions to new informaion (going against bayes" theorem) Evidence that investors are conservaive in their reacion to new evidence. Revising beliefs less than bayes" theorem implies retain excess weight on prior beliefs. Individuals are oten overconident overesimate the precision of informaion they collect for themselves (underreact to new informaion that isn"t self collected)
