Thesis advisor: Harold Petersen / According to the Efficient Market Hypothesis (EMH), speculative bubbles do not exist and are impossible. We disagree. If prices are the only observable component of an asset’s value, and they themselves are an aggregated consensus of perceived value, then what about the Efficient Market Hypothesis (EMH) is testable? Rather than assume that prices always reflect value (i.e. perfect market efficiency), we maintain that markets are efficient to the extent that one can be confident that tomorrow’s prices will not diverge dramatically or arbitrarily from today’s prices, absent significant new information. Speculative bubbles are not materializing every day, every month, or even every year. But they do have the potential and indeed a tendency to occur from time to time. If markets are efficient, what explains all the trading? Rather than assume rational expectations and a homogenous investor class, we assume four investor classes that diverge in their perception of value (i.e. in their expectation of future returns) and thus trade with each other. Using insights from Hyman Minsky’s Financial Instability Hypothesis (FIH), we develop a theoretical framework for how a speculative bubble might materialize within a modern capitalist economy with securities markets’ that follow a random walk. Obviously, there is no “bubble” variable. We use Tobin’s Q, the ratio of the price of an asset to its replacement cost, and Shiller’s cyclically adjusted P/E ratio as proxy variables for bubbles. We find statistically significant, negative relationships between both of these proxy variables and our dependent variable, Ten Year Cumulative Returns, thereby providing evidence against the EMH and suggesting the possibility of speculative bubbles. / Thesis (BA) — Boston College, 2014. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Economics Honors Program. / Discipline: Economics.

This study sets out to explore attitudes and intentions towards nicotine product goods and how it is affected by the goal framing effect. The presence of this effect has been shown in the advertising of both green products and everyday products. The aim of this research is to explore whether or not this also holds true when it comes to unhealthy products, more precisely tobacco free all white nicotine products.    A quasi experimental study was conducted with the use of a fictitious brand of All-white tobacco. All 63 participants in the three different experimental groups of the study met the mandatory age requirement. One of the three groups received a positively framed advert, another received a negatively framed advert, whereas the last group acted as the control group and therefore received a neutral advertisement stimuli. All participants submitted their answers on a questionnaire created for this study, which was validated using Cronbach’s alpha and factor analysis.   The results suggest that the use of goal framing is beneficial when advertising nicotine product goods. Both positive and negative goal-framing showed a greater effect on purchase intention and product attitude than the control group. The negative goal-framing advert proved to be statistically different than the control group when measuring product attitude. Furthermore, the positively framed advert showed a statistically significant difference in effect on both product attitude and purchase intention compared to the control group.    The findings suggest that positively framed goal-framing has an effect on both attitudes and purchase intention, compared to the neutral stimuli. The negatively framed goal-framing had an effect on attitudes, compared to the neutral stimuli. The practical implication of this study could possibly be that when constructing advertisements for tobacco free snus products, it could be preferable to make use of the positive goal-framing effect in order to affect the consumers purchase intention and attitude towards the product.   This study has confirmed to some extent that the framing effect is a factor prevalent in the advertising of tobacco free products. For further research it would be highly interesting to delve deeper in comparing positive and negative goal-framing in order to find further evidence of which one has greater effect on consumers.