An epidemiological approach to opinion and price-volume dynamics

• Main Authors: HONG, Dong, HONG, Harrison G., UNGUREANU, Andrei
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2013
• Subjects: Word of Mouth; Information Diffusion; Public News; Private News; Finance; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/5332; https://ink.library.smu.edu.sg/context/lkcsb_research/article/6331/viewcontent/SSRN_id1569418__1_.pdf
• Institution: Singapore Management University

We develop a simple and tractable model of opinions and price-volume dynamics based on a word-of-mouth communication process widely used in epidemiology. Risk-averse investors have different opinions depending on whether they heard the news from a friend. Opinions initially diverge and then converge...