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Rational Explanation (rational + explanation)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	50%

Selected Abstracts

Financial markets can go mad: evidence of irrational behaviour during the South Sea Bubble1

ECONOMIC HISTORY REVIEW, Issue 2 2005
RICHARD S. DALE
This paper explores investor behaviour during the South Sea Bubble,the first major speculative boom and bust on the stock markets. Previous literature debates whether investors during this episode acted rationally. Newly acquired data involving parallel markets for the South Sea Company's stock and subscription receipts are analysed, and widening valuation gaps are observed between these substitutable financial instruments. Rational explanations do not prove adequate, and the anomalies are explained by the biased decision-making of investors, and their tendency to view financial markets as wagering markets. The implications of these findings for the current debate on rationality in financial markets are identified. [source]

An explanation of the forward premium ,puzzle'

EUROPEAN FINANCIAL MANAGEMENT, Issue 2 2000
Richard Roll
Existing literature reports a puzzle about the forward rate premium over the spot foreign exchange rate. The premium is often negatively correlated with subsequent changes in the spot rate. This defies economic intuition and possibly violates market efficiency. Rational explanations include non-stationary risk premia and econometric mis-specifications, but some embrace the puzzle as a guide to profitable trading. We suggest there is really no puzzle. A simple model fits the data: forward exchange rates are unbiased predictors of subsequent spot rates. The puzzle arises because the forward rate, the spot rate, and the forward premium follow nearly non-stationary time series processes. We document these properties with an extended sample and show why they give the delusion of a puzzle. [source]

An Equilibrium Theory of Learning, Search, and Wages

ECONOMETRICA, Issue 2 2010
Francisco M. Gonzalez
We examine the labor market effects of incomplete information about the workers' own job-finding process. Search outcomes convey valuable information, and learning from search generates endogenous heterogeneity in workers' beliefs about their job-finding probability. We characterize this process and analyze its interactions with job creation and wage determination. Our theory sheds new light on how unemployment can affect workers' labor market outcomes and wage determination, providing a rational explanation for discouragement as the consequence of negative search outcomes. In particular, longer unemployment durations are likely to be followed by lower reemployment wages because a worker's beliefs about his job-finding process deteriorate with unemployment duration. Moreover, our analysis provides a set of useful results on dynamic programming with optimal learning. [source]

Comparative evaluation of 99mTc-ethylene bis-l-cysteine and 99mTc-ethylene bis-l-,-homocysteine during reversed phase HPLC analysis and electrophoresis at various pH conditions

JOURNAL OF LABELLED COMPOUNDS AND RADIOPHARMACEUTICALS, Issue 4 2001
K.O. Mang'era
Ethylene bis- L -,-homocysteine (L,L -EH) differs from ethylene bis- L -cysteine (L,L -EC) in having an extra methylene group between each pair of amine and carboxyl groups. The objective of this study was to determine the effect of the extra methylene groups on the characteristics of the complex of these compounds with technetium-99m during analysis by reversed phase HPLC and by electrophoresis at various pH values. Up to pH 5.5, 99mTc- L,L -EH exhibits a substantially longer retention time during reversed phase HPLC than 99mTc- L,L -EC, suggesting a more lipophilic character for 99mTc- L,L -EH under these conditions. On the other hand, 99mTc- L,L -EH clearly possesses a higher negative charge in the pH range 3-6.5 as shown by the markedly greater migration towards the anode in electrophoresis experiments. A rational explanation for these seemingly opposing observations can not yet be offered. Copyright © 2001 John Wiley & Sons, Ltd. [source]

Glutamate Export at the Choroid Plexus in Health, Thiamin Deficiency, and Ethanol Intoxication: Review and Hypothesis

ALCOHOLISM, Issue 8 2008
Peter F. Nixon
Introduction:, The earliest observed effect in the pathogenesis of experimental Wernicke's encephalopathy and of ethanol intoxication in rats is impairment of the blood cerebrospinal fluid (CSF) barrier at the choroid plexus (CP). For an explanation, these observations direct attention to the role of the CP in maintaining glutamate homeostasis in the CSF. Methods:, Characteristics of the CP epithelium (CPE) are reviewed, focusing on its role in removal of glutamate from the CSF and its potential for impairment by ethanol oxidation or by thiamin-deficient glucose oxidation. Results:, The export of glutamate from CSF to blood at the CP is energy dependent, saturable, and stereospecific. However, the incapacity of the CP to convert glutamate to other metabolites makes it vulnerable to glutamate accumulation should ,-ketoglutarate dehydrogenase activity be decreased. Elsewhere ethanol metabolism and thiamin-deficiency independently decrease the activity of this mitochondrial enzyme. We argue that they have the same effect within the mitochondria-rich CPE, thereby decreasing energy production necessary for export of glutamate from CSF to blood; diverting its energy metabolism to further glutamate production; and impairing its blood CSF barrier function. This impairment appears to be mediated by glutamate and is attenuated by MK801 but whether it involves one of the CPE glutamate receptors is yet uncertain. This impairment exposes the CSF and hence the paraventricular brain extracellular fluid to neuroactive substances from the blood, including further glutamate, explaining the paraventricular location of neuropathology in Wernicke's encephalopathy. Other organs normally protected from blood by a barrier are affected also by ethanol abuse and by thiamin deficiency, namely the eye, peripheral nerves, and the testis. Much less is known regarding the function of these barriers. Conclusions:, Impairment of the CP by ethanol intoxication and by thiamin-deficient carbohydrate metabolism has a common, rational explanation that can guide future research. [source]

Momentum, Business Cycle, and Time-varying Expected Returns

THE JOURNAL OF FINANCE, Issue 2 2002
Tarun Chordia
A growing number of researchers argue that time-series patterns in returns are due to investor irrationality and thus can be translated into abnormal profits. Continuation of short-term returns or momentum is one such pattern that has defied any rational explanation and is at odds with market efficiency. This paper shows that profits to momentum strategies can be explained by a set of lagged macroeconomic variables and payoffs to momentum strategies disappear once stock returns are adjusted for their predictability based on these macroeconomic variables. Our results provide a possible role for time-varying expected returns as an explanation for momentum payoffs. [source]