Renjie, R.W. and Verwijmeren, P. (2026). Cross-Extrapolative Beliefs: Evidence from Equity Analysts Management Science, 72(4):3128--3146.
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Affiliated authors
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Publication year2026
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JournalManagement Science
We study whether individuals form extrapolative beliefs across different tasks. In line with cross-extrapolation, equity analysts who experience bad news from some of their coverage firms become overly pessimistic about other firms in their coverage. This leads to disagreement among analysts and has implications for the stock market, as we observe effects on trading volume, return volatility, and pricing. Our findings highlight the relevance of non-domain-specific belief models.