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[רמב"ם] "כי לאדם יש בטבעו אהבה ונטייה אל מה שהוא מורגל אליו; עד שאתה רואה את בני המדבר כפי שהם פרועים, נעדרי תענוגות ולחמם צר, סולדים מן הערים ואינם נהנים מהנאותיהן, ומעדיפים את התנאים הרעים שאליהם הם רגילים על מצבים טובים שאין הם רגילים אליהם. נפשם לא תסכון לשכון בארמונות, ללבוש בגדי משי, להתענג במרחץ ולמשוח עצמם בשמן ובבשמים. כן קורה לאדם שיאהב את הדעות שהוא מורגל אצלן ונתחנך עליהן, ויגן עליהן, וירגיש זרות כלפי דעות אחרות ודחייה מפניהן".
[Heuer] "As a general rule, people are too slow to change an established view, as opposed to being too willing to change. The human mind is conservative. It resists change. Assumptions that worked well in the past continue to be applied to new situations long after they have become outmoded . A study of senior managers in industry identified how some successful managers counteract this conservative bent. They do it, according to the study, By paying attention to their feelings of surprise when a particular fact does not fit their prior understanding, and then by highlighting rather than denying the novelty. Although surprise made them feel uncomfortable, it made them take the cause [of the surprise] seriously and inquire into it....Rather than deny, downplay, or ignore disconfirmation [of their prior view], successful senior managers often treat it as friendly and in a way cherish the discomfort surprise creates. As a result, these managers often perceive novel situations early on and in a frame of mind relatively undistorted by hidebound notions. Analysts should keep a record of unexpected events and think hard about what they might mean, not disregard them or explain them away. Minds are like parachutes. They only function when they are open".
[Willemien and Voorneveld] "The behavioral economics literature provides several motivations for the common observation that agents appear somewhat unwilling to deviate from their recent choices. For instance, Tversky and Kahneman (1982) mention the bias towards recent choices as an example of the availability bias, the ease with which instances come to mind. Similarly, Schelling (1960) has argued that players, when indifferent between strategies, choose the most salient strategy. In combination with the recency effect, i.e., the cognitive bias resulting from disproportionate salience of recent stimuli or observations (Miller and Campbell, 1959), this may explain why agents appear to have a preference for recent choices. Other motivations include models for agents displaying defaulting behavior or inertia (Vega-Redondo, 1993, 1995, Madrian and Shea, 2001), the formation of habits (Young, 1998), the use of rules of thumb (Ellison and Fudenberg, 1993), or the locking in on certain modes of behavior due to learning by doing (Grossman, 1977) or, as Joosten (1995) express it: unlearning by not doing".
[Shefrin] "A combination of overconfidence, together with anchoring and adjustment leads investors and analysts to adapt insufficiently to the arrival of new information. The result is conservatism".
[Fuller] Both analysts and investors are slow to recognize the information associated with a major earnings surprise. Instead, they overconfidently remain anchored to their prior view of the company's prospects. That is, they underweight evidence that disconfirms their prior views and overweight confirming evidence. Consequently, both analysts and investors interpret a permanent change as if it were temporary; thus the price is slow to adjust. Fuller would buy a stock soon after a major positive earnings surprise and hold it until the positive earnings surprises diminished or disappeared.
[Montier] "(Conservatism bias) is the tendency to cling tenaciously to a view or a forecast. Once a position has been stated most people find it very hard to move away from that view. When movement does occur it is only very slow (this creates under-reaction to events)".
[Munger] "Now let's talk about efficient market theory, a wonderful economic doctrine that had a long vogue in spite of the experience of Berkshire Hathaway. In fact one of the economists who won - he shared a Nobel Prize - and as he looked at Berkshire Hathaway year after year, which people would throw in his face as saying maybe the market isn't quite as efficient as you think, he said, "Well, it's a two-sigma event." And then he said we were a three-sigma event. And then he said we were a four-sigma event. And he finally got up to six sigmas - better to add a sigma than change a theory, just because the evidence comes in differently. [Laughter] And, of course, when this share of a Nobel Prize went into money management himself, he sank like a stone".
A Model of Investor Sentiment, Barberis, Shleifer and Vishny, 1998
"Recent empirical research in finance has uncovered two families of pervasive regularities: underreaction of stock prices to news such as earnings announcements; and overreaction of stock prices to a series of good or bad news. In this paper, we present a parsimonious model of investor sentiment that is, of how investors form beliefs that is consistent with the empirical findings. The model is based on psychological evidence and produces both underreaction and overreaction for a wide range of parameter values".
The Extreme Future Stock Returns Following Extreme Earnings Surprises, DOYLE, LUNDHOLM and SOLIMAN, 2003
We find that firms with extreme earnings surprises tend to be "neglected" stocks in terms of the information environment. Firms with extreme positive earnings surprises tend to have persistent earnings surprises in the same direction, strong growth in cash flows and earnings, and large increases in analyst coverage, relative to firms with extreme negative earnings surprises.
On Confirmation Bias and Deviations From Bayesian Updating, Chetan and Wolfe, 2004
"Psychologists have documented several biases and heuristics that describe deviations from Bayesian updating in individual decision making under uncertainty. Confirmation Bias predicts that individuals will exhibit systematic errors in updating their beliefs about the state of the world given a stream of information. The experiment in this paper examines (and) shows that subjects display conservatism by underweighting new information when updating. In addition, subjects display confirmation bias by differentiating between confirming and disconfirming evidence".