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Cambridge Endowment for Research in Finance (CERF)


Thies Lindenthal

Title of research: Behavioural Biases as an Indicator for Asset Value Uncertainty

Buyers and sellers of heterogeneous goods in thin  markets are brave: despite the lack of long histories of transactions and the absence  of sufficiently high numbers of comparable sales, they still form opinions on values, agree to trade and thereby serve as trailblazers for subsequent transactions. Without hard data and economic models at hand, these pioneering investors are hypothesized to be more susceptible to behavioural biases and price heuristics than investors in markets where more and better information is available.

This project empirically investigates whether behavioural biases are more widespread in markets with relatively high uncertainty regarding fundamental asset values. As some of these biases are easy to observe, their prevalence can serve as a readily available indicator for asset value uncertainty.

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