Accounting Papers

Document Type

Journal Article

Date of this Version

2-1-1999

Publication Source

Journal of Accounting and Economics

Volume

27

Issue

1

Start Page

89

Last Page

124

DOI

10.1016/S0165-4101(98)00046-9

Copyright/Permission Statement

We characterize the steady-state equilibrium in which informed traders who exhibit heuristic (i.e., representativeness, as opposed to Bayesian) and Bayesian behaviors achieve the same expected utility. Then, we show how the endogenous, steady-state proportion of heuristic traders is affected by the quality of public information and other exogenous features of our model. Finally, we discuss how the presence of heuristic traders potentially alters the link between improved public disclosure and market liquidity, the variance in the change in price, and market efficiency.

Keywords

capital markets, heuristic trade, disclosure

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Accounting Commons

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Date Posted: 27 November 2017

This document has been peer reviewed.