| Meta-Communication and Market Dynamics. Reflexive Interactions of Financial Markets and the Mass Media (2007) | |||||||||||||||
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| A widely held belief in financial economics suggests that stock prices always adequately reflect all available information. Price movements away from fundamentals are assumed to occur only infrequently, if at all. "False" prices are supposed to be corrected by the counter-actions of "rational" investors reestablishing equilibrium. However, empirical evidence of widespread irrationality among investors as well as theoretical insights into the properties of complex systems suggest that this view is too static. In fact, it can be shown that under certain conditions dynamic disequilibria have a considerable probability of being "locked in". | |||||||||||||||
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