Herding over the career

Avery, Christopher; Chevalier, Judith A.

doi:10.1016/s0165-1765(99)00039-7

Cited by 149 publications

(88 citation statements)

References 2 publications

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“…E knows that p is distributed on [. 5,1] according to f (p). I assume that E observes the action a chosen by D, the realized state of the world ω, and the prior q.…”

Section: The Information Structurementioning

confidence: 99%

“…Assume that the initial prior is the symmetric one, i.e., that each state can occur with probability 1 2 . There is an adviser who receives a signal about the state of the world.…”

Section: Extensionsmentioning

confidence: 99%

“…5,1]. Let the utility function of A be π A + θ A I, where π A are the beliefs of E on the type of A and θ A ≥ 0 measures how much A cares about the outcome.…”

Section: Strategic Advisersmentioning

confidence: 99%

“…1 There are more recent examples of decision makers who choose to ignore advice or go against public opinion. President Truman's decision to fire General Douglas MacArthur during the Korean War was in defiance of public opinion.…”

mentioning

confidence: 99%

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Anti-herding and strategic consultation

Levy

2004

European Economic Review

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In this paper I analyze how careerist decision makers aggregate and use information provided by others. I find that decision makers who are motivated by reputation concerns tend to 'anti-herding', i.e., they excessively contradict public information such as the prior or others' recommendations. I also find that some decision makers may deliberately act unilaterally and not consult advisers although advice is costless.Moreover, advisers to the decision maker may not report their information truthfully.Even if the advisers care only about the outcome, they bias their recommendation since they anticipate inefficient anti-herding behavior by the decision maker.JEL Classification Numbers: D82; D83.

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“…E knows that p is distributed on [. 5,1] according to f (p). I assume that E observes the action a chosen by D, the realized state of the world ω, and the prior q.…”

Section: The Information Structurementioning

confidence: 99%

“…Assume that the initial prior is the symmetric one, i.e., that each state can occur with probability 1 2 . There is an adviser who receives a signal about the state of the world.…”

Section: Extensionsmentioning

confidence: 99%

“…5,1]. Let the utility function of A be π A + θ A I, where π A are the beliefs of E on the type of A and θ A ≥ 0 measures how much A cares about the outcome.…”

Section: Strategic Advisersmentioning

confidence: 99%

mentioning

confidence: 99%

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Anti-herding and strategic consultation

Levy

2004

European Economic Review

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“…While the first two studies find a positive impact of a CFA and an MBA, respectively, on performance, the latter three studies generally do not find an impact. Further studies analyze the relation between investment behavior and other manager characteristics like IQ (Grinblatt et al, 2012), age (Chevalier and Ellison, 1999b), experience (Avery and Chevalier, 1999;Ding andWermers, 2012), or gender (Niessen-Ruenzi andRuenzi, 2015 which impact a specific education has on investment behavior, but also to consider that managers reveal their personal attitudes by the educational path they choose.…”

mentioning

confidence: 99%

Choosing two business degrees versus choosing one: What does it tell about mutual fund managers' investment behavior?

Andreu

Puetz

2017

Journal of Business Research

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Competitive Dynamics in Forecasting: The Interaction of Skill and Uncertainty

Evgeniou

Fang

Hogarth

et al. 2012

Behavioral Decision Making

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The outcomes in many competitive tasks depend upon both skill and luck. Behavioral theories on risk taking in tournaments indicate that low‐skilled individuals may have incentives to take more risks than high‐skilled ones. We build on these theories and suggest, in addition, that when luck is more important in determining outcomes, the increase in risk taking is larger for low‐skilled than high‐skilled individuals. We test this hypothesis by analyzing stock analysts' forecasts of companies' earnings per share under market conditions that vary in volatility and thus imply different levels of luck in outcomes. Specifically, noting that forecasts that deviate widely from the consensus—which is observable by the analyst—potentially carry career‐related rewards but also reputational risks, we examine the degree of deviation from consensus exhibited by analysts of different skill levels (measured by both past forecasting accuracy and education) in different market conditions. We find that average deviations from consensus increase as markets become more volatile. At the same time, under conditions of high volatility, low‐skilled analysts exhibit larger increases in deviations from consensus than high‐skilled analysts. These field data results support our hypothesis based on of risk taking in tournaments. We discuss alternative interpretations such as, for example, self‐serving attributions and indicate directions for future research. Copyright © 2012 John Wiley & Sons, Ltd.

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Herding over the career

Cited by 149 publications

References 2 publications

Anti-herding and strategic consultation

Anti-herding and strategic consultation

Choosing two business degrees versus choosing one: What does it tell about mutual fund managers' investment behavior?

Competitive Dynamics in Forecasting: The Interaction of Skill and Uncertainty

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