This programme examines how different types of agents interact in financial markets; how asset prices are formed and relate to economic fundamentals; how price movements impact firms’ investment and the macro-economy; and how regulatory policies affect market outcomes and economic welfare. Part of the research in this programme is conducted within the Paul Woolley Centre (PWC). Research at the PWC departs from the Arrow-Debreu view of frictionless markets and emphasizes the role of financial institutions and their managers’ incentives in influencing asset prices and the allocation of capital in the economy, and in causing occasional mispricing and misallocation. PWC research focuses primarily on the asset management sector.
The Programme Director is Dimitri Vayanos.
Paul Woolley Centre
Latest Publications
Investor Memory and Biased Beliefs: Evidence from the Field
We survey a large representative sample of retail investors in China to elicit their memories of stock market investment and return expectations. We...
The Law of Small Numbers in Financial Markets: Theory and Evidence
We build a model of the law of small numbers (LSN)—the incorrect belief that even small samples represent the properties of the underlying population...
The Inference-Forecast Gap in Belief Updating
Evidence from experiments, surveys, and the field has uncovered both underreaction and overreaction to new information. We provide new experimental...
Unintended Consequences of Holding Dollar Assets
We examine a novel mechanism whereby the US dollar’s global dominance can have a large, unexpected impact on foreign Treasury yields in crisis periods...