Homework 2
Answer the following
1. Arbitrage is limited because the wealth of arbitrageurs is limited. Discuss this statement in the context of those who are managing their own money and those who are managing other people’s money.
2. Differentiate the following terms and concepts:
Primacy and recency effects
Salience and availability
Fast-and-frugal heuristics and bias-generating heuristics
Autonomic and cognitive heuristics