Noise Trading and Illusory Correlations in US Equity Markets

摘要: This paper provides evidence that "illusory correlations"--a well-documented source of cognitive bias--lead some agents to be imperfectly rational noise traders. We focus on the head-and-shoulders chart pattern, considered by technical analysts provide one most reliable trading signals. Our findings indicate pattern is associated with a substantial rise in volume even though it does not profitably predict directional movements. further substantiate connection between and showing lower bid-ask spreads. Copyright 2013, Oxford University Press.