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Noise (economic)
Economic noise, or simply noise, describes a theory of pricing developed by Fischer Black. Black describes noise as the opposite of information: hype, inaccurate ideas, and inaccurate data. His theory states that noise is everywhere in the economy and we can rarely tell the difference between it and information. Noise has two broad implications. *It allows speculative trading to occur (see below). *It is indicative of market inefficiency. Loudon and Della Bitta (1988) refer to noise as “a type of disruption in the communication process” and go further stating that "each state of the communication process is susceptible to (this) message distortion." (As cited in Wu & Newell, 2003). Therefore, we can say that noise is a disruption within the communication process and can be found in all forms within the communication process. and in a procces have a something special, because they have a same synonym. Some examples of noise could be distortion of a television advertisement or in ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Fischer Black
Fischer Sheffey Black (January 11, 1938 – August 30, 1995) was an American economist, best known as one of the authors of the Black–Scholes equation. Working variously at the University of Chicago, the Massachusetts Institute of Technology, and at Goldman Sachs, Black died two years before the Nobel Memorial Prize in Economic Sciences (which is not given posthumously) was awarded to his collaborator Myron Scholes and former colleague Robert C. Merton for the Black-Scholes model and Merton's application of the model to a continuous-time framework. Black also made significant contributions to the capital asset pricing model and the theory of accounting, as well as more controversial contributions in monetary economics and the theory of business cycles. Background Fischer Sheffey Black was born on January 11, 1938. He graduated from Harvard College with a major in physics in 1959 and received a PhD in applied mathematics from Harvard University in 1964. He was initially ex ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Zero-sum Game
Zero-sum game is a Mathematical model, mathematical representation in game theory and economic theory of a situation that involves two competition, competing entities, where the result is an advantage for one side and an equivalent loss for the other. In other words, player one's gain is equivalent to player two's loss, with the result that the net improvement in benefit of the game is zero. If the total gains of the participants are added up, and the total losses are subtracted, they will sum to zero. Thus, Fair cake-cutting, cutting a cake, where taking a more significant piece reduces the amount of cake available for others as much as it increases the amount available for that taker, is a zero-sum game if marginal utility, all participants value each unit of cake equally. Other examples of zero-sum games in daily life include games like poker, chess, sport and Contract bridge, bridge where one person gains and another person loses, which results in a zero-net benefit for every ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Noise Trader
A noise trader is a stock trader whose decisions to buy or sell are based on "factors they believe to be helpful but in reality will give them no better returns than random choices". These factors may include hype or rumor, which noise traders believe to be reliable signals of future returns, but which are actually forms of economic noise that cannot be used to accurately predict the future value of a stock. Noise traders do not trade randomly; their decisions are systematic. However, their trading decisions are not based on professional advice or a business's fundamentals, and the purported signals used by noise traders are more unreliable than those used by technical analysts. Therefore, returns on their trading decisions are expected to be no better than random choices. Noise traders often act irrationally: they tend to be emotion-driven, impulsive, reactive, and herd-like. The presence of noise traders in financial markets can cause prices and risk levels to diverge from ex ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Entrepreneur
Entrepreneurship is the creation or extraction of economic value in ways that generally entail beyond the minimal amount of risk (assumed by a traditional business), and potentially involving values besides simply economic ones. An entrepreneur () is an individual who creates and/or invests in one or more businesses, bearing most of the risks and enjoying most of the rewards. The process of setting up a business is known as "entrepreneurship". The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures. More narrow definitions have described entrepreneurship as the process of designing, launching and running a new business, often similar to a small business, or (per ''Business Dictionary'') as the "capacity and willingness to develop, organize and manage a business venture along with any of its risks to make a profit". The people who create these businesses are often referred to as "entrepreneurs". In the field of ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Law Of Large Numbers
In probability theory, the law of large numbers is a mathematical law that states that the average of the results obtained from a large number of independent random samples converges to the true value, if it exists. More formally, the law of large numbers states that given a sample of independent and identically distributed values, the sample mean converges to the true mean. The law of large numbers is important because it guarantees stable long-term results for the averages of some random events. For example, while a casino may lose money in a single spin of the roulette wheel, its earnings will tend towards a predictable percentage over a large number of spins. Any winning streak by a player will eventually be overcome by the parameters of the game. Importantly, the law applies (as the name indicates) only when a ''large number'' of observations are considered. There is no principle that a small number of observations will coincide with the expected value or that a stre ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Econometrics
Econometrics is an application of statistical methods to economic data in order to give empirical content to economic relationships. M. Hashem Pesaran (1987). "Econometrics", '' The New Palgrave: A Dictionary of Economics'', v. 2, p. 8 p. 8–22 Reprinted in J. Eatwell ''et al.'', eds. (1990). ''Econometrics: The New Palgrave''p. 1 p. 1–34Abstract ( 2008 revision by J. Geweke, J. Horowitz, and H. P. Pesaran). More precisely, it is "the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference." An introductory economics textbook describes econometrics as allowing economists "to sift through mountains of data to extract simple relationships." Jan Tinbergen is one of the two founding fathers of econometrics. The other, Ragnar Frisch, also coined the term in the sense in which it is used today. A basic tool for econometrics is the multiple linear regression model. ''Econome ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Variable (mathematics)
In mathematics, a variable (from Latin language, Latin ) is a Mathematical symbol, symbol, typically a letter, that refers to an unspecified mathematical object. One says colloquially that the variable ''represents'' or ''denotes'' the object, and that any valid candidate for the object is the value (mathematics), value of the variable. The values a variable can take are usually of the same kind, often numbers. More specifically, the values involved may form a Set (mathematics), set, such as the set of real numbers. The object may not always exist, or it might be uncertain whether any valid candidate exists or not. For example, one could represent two integers by the variables and and require that the value of the square of is twice the square of , which in algebraic notation can be written . A definitive proof that this relationship is impossible to satisfy when and are restricted to integer numbers isn't obvious, but it has been known since ancient times and has had a big ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Correlation
In statistics, correlation or dependence is any statistical relationship, whether causal or not, between two random variables or bivariate data. Although in the broadest sense, "correlation" may indicate any type of association, in statistics it usually refers to the degree to which a pair of variables are '' linearly'' related. Familiar examples of dependent phenomena include the correlation between the height of parents and their offspring, and the correlation between the price of a good and the quantity the consumers are willing to purchase, as it is depicted in the demand curve. Correlations are useful because they can indicate a predictive relationship that can be exploited in practice. For example, an electrical utility may produce less power on a mild day based on the correlation between electricity demand and weather. In this example, there is a causal relationship, because extreme weather causes people to use more electricity for heating or cooling. However, in g ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Causality
Causality is an influence by which one Event (philosophy), event, process, state, or Object (philosophy), object (''a'' ''cause'') contributes to the production of another event, process, state, or object (an ''effect'') where the cause is at least partly responsible for the effect, and the effect is at least partly dependent on the cause. The cause of something may also be described as the reason for the event or process. In general, a process can have multiple causes,Compare: which are also said to be ''causal factors'' for it, and all lie in its past. An effect can in turn be a cause of, or causal factor for, many other effects, which all lie in its future. Some writers have held that causality is metaphysics , metaphysically prior to notions of time and space. Causality is an abstraction that indicates how the world progresses. As such it is a basic concept; it is more apt to be an explanation of other concepts of progression than something to be explained by other more fun ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Grossman-Stiglitz Paradox
The Grossman-Stiglitz Paradox is a paradox introduced by Sanford J. Grossman and Joseph Stiglitz in a joint publication in ''American Economic Review'' in 1980 that argues perfectly informationally efficient markets are an impossibility since, if prices perfectly reflected available information, there is no profit to gathering information, in which case there would be little reason to trade and markets would eventually collapse. Rational efficient markets formulation The rational efficient markets formulation recognizes that investors will not rationally incur the expenses of gathering information unless they expect to be rewarded by higher gross returns compared with the free alternative of accepting the market price. Furthermore, modern theorists recognize that when intrinsic value is difficult to determine, as is the case of common stock, and when trading costs exist, even further room exists for price to diverge from value. A corollary is that investors who purchase index ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
