beliefs

Rating Agency Beliefs and Credit Market Distortions

Credit rating agencies (CRAs) make regular forecasts of the future credit market conditions and explicitly incorporate these forecasts in their credit rating processes. We show that CRAs beliefs induce mispricing in corporate bond markets, which in …

Under- and Overreaction in Yield Curve Expectations

I document a robust pattern in how Treasury market participants' yield curve expectations respond to new information: forecasts for short-term rates underreact to news while forecasts for long-term rates overreact. I propose a new explanation of this …

Delegation Uncertainty

Delegation bears an intrinsic form of uncertainty. Investors hire managers for their superior models of asset markets, but delegation outcome is uncertain precisely because managers' model is unknown to investors. We model investors' delegation …