1/ I’m studying economic and financial fallacies. Could you help me out, #Econtwitter and #Financetwitter ? I’d like to build a collection of clear-cut examples.
Ground rules:
Ground rules:
2/ Needs to (1) Be a specific economic error, not a general psychological bias such as overconfidence or limited attention. (2) Clearly be a mistake. (3) ...
3/ ... Be an explicit belief about how the world works, not just an implicit naïve “belief” that derives from forgetting to take a consideration into account. (So neglect of opportunity cost is not a fallacy for my purposes.) I call such beliefs "economic folk models."
4/ To prime the pump, some finance examples:
-The payback criterion for project adoption
-Belief that equity issuance must dilute share value
-Belief that a stock whose price has recently fallen must have become a better bargain
Thanks in advance!
-The payback criterion for project adoption
-Belief that equity issuance must dilute share value
-Belief that a stock whose price has recently fallen must have become a better bargain
Thanks in advance!
5/ A other example: the @SamHartzmark and David Solomon Free Dividends Fallacy.