“Breaking News” and… Breaking Noise

Kostas Tsiveriotis ()

Journal of the Knowledge Economy, 2015, vol. 6, issue 1, 28-30

Abstract: As real-time news updates and analysis have become widely available, one has to rethink the effect of noise on news. Noise has the fundamental property of becoming dominant over short periods of time. As a result, many “breaking news” stories may appear more exciting and important that what they really are. Overreacting to real-time news can have inherent costs that are analogous to the cost of financial options, as the cost of the latter is the sole result of acting (trading) on short-term noise (stock volatility). Understanding the dynamics of noise and appreciating its effect on short-term developments can be quite valuable in our times of ubiquitous access to real-time news flow. Copyright Springer Science+Business Media New York 2015

Keywords: Options; Radom walks; Behavioral finance (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1007/s13132-013-0164-5

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