# DeBondt and Thaler (1985) Discussion Questions

Tip: read the paper carefully and do external research, but not through AI. Using AI to summarize the paper will give you bland and predictable answers, which will give you nothing new to add to the discussion.

Turn in your responses on Canvas before Monday's discussion. We'll spend 10 minutes discussing each question. You'll need to contribute twice, moving the conversation forward each time.

1. Who are DeBondt and Thaler? What is the rest of their work on?

2. What is Bayes' Rule and how does it relate to appropriate reactions to news in the stock market?

3. What is Kahneman and Tversky's representativeness heuristic and how does it relate to appropriate reactions to news in the stock market?

4. Explain the price-earnings anomaly. Why is it an anomaly?

5. What are the testable hypotheses of this paper?

6. Outline how a replication of this paper should proceed.

7. How do CAPM misspecifications confound results? What is DeBondt and Thaler's precaution and how does it work?

8. What are the main empirical findings in this paper?

