Hedonomics – The (Behavioural) Economics of Happiness
Cognitrend’s newest seminar reveals the findings of over a decade of scientific research on happiness. It begins by making a clear distinction between two very different concepts of what is known as commonly ‘happiness’: life satisfaction, the thoughtful evaluation of our life all things taken into consideration; and emotional well-being, the fleeting joy associated with a given moment. The discussion then focuses on the influence of wealth on happiness and on how money can be used to maximise both types.
Buying Winners and Selling Losers: A Thirty Year Love Affair
In the eighties behavioural finance research turned to finding an explanation for one particular market anomaly: the excess returns accrued to momentum strategies. Almost thirty years later, we see that stock prices are still drifting. Although later academic research efforts sought to find an ‘efficient market’ explanation for the anomaly, for instance, liquidity risk, these new insights have, at best, only been able to account for part of the positive momentum. Negative momentum has remained a challenge for asset price modelling: the market is still unable to deal appropriately with bad news. This presentation revisits the theme. It explains the human ‘limits to arbitrage’ and shows where it can inform our understanding of asset prices and enable us to better exploit momentum. It also takes a closer look at price reactions to news, from earnings surprises to what is the most negative of corporate news – bankruptcy.