BUS 421 Study Guide - Final Guide: Accrual, Financial Statement, Income Statement

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 421
• Professor: Jamal Nazari

Document Summary

Limited attention - investors don"t have the time, inclination, or ability to process all available information. Consequently, they will concentrate only on information that is readily available. Conservative - investors put excess weight on their prior beliefs and revise their beliefs by less than bayes" theorem implies. Overconfident - investors overestimate the accuracy of information they collect themselves and underreact to new information they didn"t collect. Representativeness - investors assign too much weight to evidence that is consistent with their impression of the population from which the evidence is drawn. Self-attribution bias - investors attribute good outcomes to their own abilities and bad outcomes to unfortunate realizations of states of nature. Motivated reasoning - investors accept information that is consistent with their preferences (good news) and become skeptical with information that is inconsistent with their preferences (bad news) Prospect theory - investors should under rational decision theory evaluate gains and losses by the same criteria, however in practice many don"t.