First, individuals are limited in their ability to process all available information at once, which leads them to underreact
to publicly available information (Barber and Odean, 2008; DellaVigna and Pollet, 2009; Hirshleifer, Lim, and Teoh, 2009).
(2008) studied stock market data from 48 countries, a world market index, and oil spot prices for three main indices--Oil-Brent, Dubai and West Texas Intermediate--concluding that stock returns seem to underreact
to oil price fluctuations.
"You have to learn with respect to making sure that you don't overreact or underreact
," said Hill.
(638) If the information confirms an individual's belief, she will overreact if she had a good first impression of the expert and underreact
if she had a bad first impression.
Overall, Figure 1 and Figure 2 support the notion that conflicting-mood distraction can cause investors to underreact
to the mood-incongruent firm news.
"Generally we're people who underreact
" to physical complaints, Ralph noted.
On the other side is conservatism which makes people underreact
to news and be too slow to update their thoughts in response to new evidence.
It means that stock prices underreact
to firm specific information.
Boyd sought to "collapse (an) adversary's system into confusion and disorder by causing him to over- and underreact
to activity that appears simultaneously menacing as well as ambiguous, chaotic, and misleading." (4) The concept of attribution advantage supports those aims.
The first assigns weights to diverse probabilities, whereby individuals overreact to minor probability events and underreact
to medium and large ones; and the second ascribes subjective value to prospects relative to choice reference points, whereby individuals are risk-averse about gains and risk-seeking regarding losses.
1145, 1145 (2009) (finding that "consumers underreact
to taxes that are not salient").
I would have come home," the Ohio governor said, adding that though the president should overreact to situations, he shouldn't underreact