01669cas a2200253 a 4500 AALejournalIMF003388 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451860283 1018-5941 BD-DhAAL BD-DhAAL Eckwert, Bernhard. Asset Mispricing Due to Cognitive Dissonance / Bernhard Eckwert, Burkhard Drees. Washington, D.C. : International Monetary Fund, 2005. 1 online resource (30 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The behavior of equity prices is analyzed in a general equilibrium model where agents have preferences not only over consumption but also (implicitly) over their beliefs. To alleviate cognitive dissonance, investors endogenously choose to ignore information that conflicts too much with their ex ante expectations. Depending on the new information that is released, systematic overvaluation and undervaluation of equity prices arise, as well as too much and too little equity price volatility. The distortion in the asset pricing process is closely related to the precision of the information. Mode of access: Internet Drees, Burkhard. IMF Working Papers; Working Paper ; No. 2005/009 Full text available on IMF http://elibrary.imf.org/view/journals/001/2005/009/001.2005.issue-009-en.xml IMF e-Library