Psychological studies show that humans overweight tangible factors and underweight intangible ones when making decisions.
This talk shows how these biases affect the stock market – it focuses excessively on short-term profit, but ignores environmental, social and governance (ESG) factors. As a result, all investors – not just ESG investors – can profit by using intangible factors that are not fully valued by the market.
It also explains how investors can uncover tell-tale signals of CEOs’ confidence in their firm and invest accordingly.
A lecture by Alex Edmans
The transcript and downloadable versions of the lecture are available from the Gresham College website:
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