U.S. Treasury Runs Into Theories on Irrational Investing » financialsurfer.com

U.S. Treasury Runs Into Theories on Irrational Investing

December 17th, 2009 | Category: Economy
The Treasury Department’s decision to shelve its plans to  sell its stake in Citigroup Inc. struck us as a prime example of a popular theory in economics called ‘loss aversion’ at play in the real world with large stakes. The Treasury abruptly shelved plans to reduce its 34% stake in Citigroup Inc. after investors balked at buying the bank’s shares. Given the tepid demand, Citigroup had to sell its stock at a discounted price of $…

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