Associative memory, beliefs and market interactions

• 成果类型: Article
• 署名作者: Enke, Benjamin; Schwerter, Frederik; Zimmermann, Florian
• 署名单位: Harvard University; National Bureau of Economic Research; Frankfurt School Finance & Management; University of Cologne; University of Bonn; IZA Institute Labor Economics
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2024.103853
• 发表日期: 2024
• 关键词: beliefs; expectations; memory; associations; bounded rationality

摘要

Recent theories and narratives highlight the potential role of associative recall in driving overreaction in expectations and market behavior. Based on a simple model, we test this idea through a series of experiments in which news are communicated with memorable contexts. Because the experimental participants predominantly remember those past news that get cued by new information, their beliefs about fundamentals strongly overreact. In a betting market experiment, associative recall translates into overreaction in market prices, which makes realized prices too extreme. Our results highlight the importance of associative memory for beliefs and financial decisions.