We build a model of the law of small numbers (LSN)—the incorrect belief that even small samples represent the properties of the underlying population—to study its implications for trading behavior and asset prices. In our model, a belief in the LSN induces investors to expect short-term price trends to revert and long-term price trends to […] The post What if investors overextrapolate from small samples? appeared first on Marginal REVOLUTION.
Authors
- Published in
- United States of America
- Rights
- © Tyler Cowen
