If all investors attempt to behave in an entirely rational manner, could these differences still exist? In answering this question, think about information that’s available to insiders versus outsiders, the fact that historical probabilities of financial events are “fuzzier” than probabilities related to physical items, and the validity of the concepts of animal spirits, herding and anchoring.
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The differences could be reduced or non-existent because the investors will not prefer just some places and not others.Economic disparities will be reduced because investment will results in the development of all parts in the world, so to enhance investment the insiders should be friendly ,welcoming and have high reputation to attract outsiders while the outsiders should investment for both parties gain rather than to siphon resources from natives.
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Jun 16th, 2015
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