Extreme Categories and Overreaction to News.

What characteristics of news generate over-or-underreaction? We study the asset-pricing consequences of diagnostic expectations, a model of belief formation based on the representativeness heuristic, in a setting where news events are drawn from categories with extreme distributions of fundamentals....

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Bibliographic Details

Published in:	Review of Economic Studies Vol. 93; no. 2; pp. 1137 - 1167
Main Authors:	Kwon, Spencer Y, Tang, Johnny
Format:	Article
Published:	Oxford University Press / USA Mar2026
Subjects:	Heuristic Investors Outliers (Statistics) Announcements Prices of securities Investment risk
Online Access:	View this record in EBSCOhost