Journal of
Marketing Development and Competitiveness






Scholar Gateway


Abstracts prior to volume 5(1) have been archived!

Issue 5(1), October 2010 -- Paper Abstracts
Girard  (p. 9-22)
Cooper (p. 23-32)
Kunz-Osborne (p. 33-41)
Coulmas-Law (p.42-46)
Stasio (p. 47-56)
Albert-Valette-Florence (p.57-63)
Zhang-Rauch (p. 64-70)
Alam-Yasin (p. 71-78)
Mattare-Monahan-Shah (p. 79-94)
Nonis-Hudson-Hunt (p. 95-106) 



JOURNAL OF APPLIED BUSINESS AND ECONOMICS


On the Survival of Conservatism Traders in an Asset Market with Strategic Interaction


Author(s): Guo Ying Luo

Citation: Guo Ying Luo, (2018) "On the Survival of Conservatism Traders in an Asset Market with Strategic Interaction"," Journal of Applied Business and Economics, Vol. 20, Iss.6,  pp. 178-184

Article Type: Research paper

Publisher: North American Business Press

Abstract:

This paper examines a static model of an asset market with rational traders, conservatism traders and
noise traders. Both rational and conservatism traders receive an informational signal about the asset
payoff before any trade takes place. Conservatism traders are slow to update their conditional mean of
the asset payoff relative to rational traders. To maximize their own expected profits, all rational and
conservatism traders strategically submit their market orders to the market maker. This paper proves
analytically that conservatism traders cannot survive. The implication of the results suggests that the
anomaly of asset price underreaction to new information is a short-lived phenomenon.