4 ms·
That's probably not right. Under mild assumptions, each successive update to expectations will be proportionally smaller in magnitude, and the price will conver
by smallnamespace 10y ago
That's probably not right. Under mild assumptions, each successive update to expectations will be proportionally smaller in magnitude, and the price will converge geometrically to a somewhat lower (but non-zero) number.
It's the same reason why the government spending multiplier isn't infinite, even though government spending spurs private sector spending, and private sector spending increases the tax base.
- ewzimm 10y agoI was wondering if someone might say something like this! Of course, my statement was meant to be absurd. I was just imagining the arguments of future lawyers explaining how their clients' stocks were infinitely valuable becuase of the assumed profit-seeking behavior and anticipation of lawsuits by investors.