Will a nationalist president be undone by his underreaction to a foreign threat?
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Ross thinks President Trump's underreaction makes draconian measures to slow the virus's spread increasingly necessary.
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While there was underreaction on the part of regulators at first, "now you are really seeing the pendulum swinging the other way," she added.
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" Kimmelman concurs, and though he says no one knows the exact right answer, "we don't know how things are going to unfold, and from my standpoint, the risks of underreaction are so much more catastrophic than the risks of overreaction.
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Perhaps the worst can be averted, but these scenarios have been obvious from early in the epidemic — and so has the possibility that underreaction could make things worse, that a bias toward stability and reassurance could lead to darker outcomes in the end.
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Background Reading: Ross on Trump's dangerous underreaction to the coronavirus, American decadence and "The Decadent Society: How We Became the Victims of Our Own Success" David on what you can do to fight coronavirus and the threat it poses to Trump's presidency I've been an Op-Ed columnist since 2009, and I write about politics, religion, pop culture, sociology and the places where they all intersect.
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Information received too quickly or too late can cause over- or underreaction, even oscillations.
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The opposite of normalcy bias is overreaction bias. Noting the effect regression to the mean, most deviations from normalcy do not lead to catastrophe, despite regular predictions of doomsday. Both underreaction (normalcy bias) and overreaction (worst-case thinking) are cognitive flaws and may extend to patterns of cognitive distortions.
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Momentum strategies often involve disproportionately trading in stocks with high bid-ask spreads and so it is important to take transactions costs into account when evaluating momentum profitability. The second theory assumes that momentum investors are exploiting behavioral shortcomings in other investors, such as investor herding, investor over- and underreaction, disposition effects and confirmation bias. Seasonal or calendar effects may help to explain some of the reason for success in the momentum investing strategy. If a stock has performed poorly for months leading up to the end of the year, investors may decide to sell their holdings for tax purposes causing for example the January effect.
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The Australian Commonwealth Naval Board felt that the captain's decision to charge by warrant was alarming, and felt the charges and punishment were an underreaction to what they considered an act of mutiny. After an inquiry into the incident, six of the sailors, plus a seventh who had incited but not participated in the protest, were discharged from the navy, and provisions were made to restore sailor pay levels. Moresby alongside at Bowen, Queensland during the 1930s After the surveying exercises were completed, Moresby was returned to reserve on 14 December 1934 and her boilers were converted from coal to oil burning. Moresby was reconverted for survey work and recommissioned on 11 April 1935, returning to northern Australia until the beginning of World War II in September 1939.
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However, the anticipated pandemic did not emerge, and "rising percentages" of the 45 million vaccinated were afflicted with Guillain–Barré syndrome, which provoked over 24 deaths. Sencer was both condemned and supported. Having worked with Sencer at CDC, the dean of Emory's Rollins School, James W. Curran, explained, "Dave Sencer made a hard choice, and he did it for the right reason — to protect the American public... He was trying to protect Americans had there been [a swine flu epidemic], and absent one, there was bound to be criticism." In 2006, Sencer wrote a report on the swine flu program: "When lives are at stake, it is better to err on the side of overreaction than underreaction... In 1976, the federal government wisely opted to put protection of the public first".
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Much of his work on investor psychology has focused on the effects of biased self-attribution, overconfidence, and limited attention. He and his co-authors were awarded the 1999 Smith Breeden Award for research showing how investor overconfidence, in combination with biased self-attribution, can explain the short-run momentum (finance) and long-run reversal patterns found the returns of many stock markets. More recent work has shown how investor overconfidence may also help explain the forward premium puzzle in foreign exchange markets .“Investor Overconfidence and the Forward Premium Puzzle,” Craig Burnside, Bing Han, David Hirshleifer and Tracy Yue Wang, forthcoming, Review of Economic Studies In his work on limited attention, he has shown that both distracting events“Driven to Distraction: Extraneous Events and Underreaction to Earnings News,” David Hirshleifer, Sonya Lim, and Siew Hong Teoh, Journal of Finance, 63(5), October (2009):2287-2323 and lack of attention to relevant information“Limited Attention, Information Disclosure, and Financial Reporting, David Hirshleifer and Siew Hong Teoh, Journal of Accounting and Economics, 36(1–3), December, (2003), 337–386.
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