Economy and helps creates.S.
We humans maximize the present value of our (probability weighted) future utility.
Similarly, its not worth taking high risk to shoot for the moon.
But, for factors such as value and momentum it is hard to make this case.The original goals of loss sharing were to (1) sell as many assets as possible to the acquiring bank and (2) have the nonperforming assets managed and collected by the acquiring bank in a manner that aligned the interests and incentives of the acquiring bank.As Ive said, prominent anomalies such as the value and momentum effects are believed to have persisted for a long while now.That must be allowed since its a decision made by the planner in me, not the doer.Their skin color or their heritage schools actively promote the belief that, on average, individuals who share that skin color or heritage are less skilled and less qualified.This is no more than the basic principle of supply and demand.More accurately and less politely, we can call this corruption, especially in less developed countries.We will return to this crucial idea when we talk about emotions, and also regarding winning a lottery.Second, since executive pay is correlated with company size, todays larger multinational companies have led to correspondingly larger executive pay.There are at least three reasons why I think it is perfectly rational to value something more when I own it, compared with its value before I owned.It is pretty much a given that the January effect no longer exists, if it ever even did.It is not coercive because individuals can always opt-out.Moreover, I get satisfaction (we call it schadenfreude) from the punishment.If I return home late, I am met with something like, Why are you late for dinner?Irrationality made great headlines and journalists and the mainstream media ate.Gold standard The ability to exchange dollars for gold at a fixed price.When Im old can I eat one?Most economists, Thaler included, view this kind of mental accounting as less than fully rational behavior.To many philosophers and economists, utility is a measure of, or a proxy for, happiness.
There are a number of problems with this approach to rationality.
Plus, money managers sometimes get invited to corporate events hosted by the companies whose stock they own, or analyze.