Journal of Economics and Finance

, Volume 31, Issue 2, pp 143–165

A market model of analysts’ opinions to explain changes in the dispersion of opinions

  • Erik Benrud

DOI: 10.1007/BF02751640

Cite this article as:
Benrud, E. J Econ Finan (2007) 31: 143. doi:10.1007/BF02751640


The demand for and supply of analysts’ opinions in this model yield an equilibrium that demonstrates how the information content of the opinions reacts to changes in exogenous parameters. The model also shows how changes in the parameters make analysts’ opinions more or less dispersed; for example, a decline in investor risk aversion, a decrease in market volatility, and an increase in information costs can lead to analysts’ opinions becoming more similar. Recognizing how exogenous factors can affect the supply and demand of analysts’ opinions gives additional insights into questions concerning what may appear to be herd behavior by analysts and also the relationship between forecast dispersion and information content. (JEL: G29, C71)

Copyright information

© Academy of Economics and Finance 2007

Authors and Affiliations

  • Erik Benrud
    • 1
  1. 1.School of Business and EconomicsLynchburg CollegeLynchburg

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