OVERCONFIDENCE 1191 In addition,the conditional mean of the beliefs of agents in group A satisfies r=-A-刀d+o+Yd4-ra0 09 +au-了40+品d0-了a. (5) Since fmean-reverts,the conditional beliefs also mean-revert.The other three terms represent the effects of "surprises."These surprises can be represented as standard mutually independent Brownian motions for agents in group A: dw (as"-pdo. (6) 0 dwg=(ds"-了d0, (7) and wg=上aD-r0. (8) Op Note that these processes are only Wiener processes in the mind of group A agents.Because of overconfidence (>0),agents in group A overreact to surprises in s4. Similarly,the conditional mean of the beliefs of agents in group B satisfies 少=-0-刀l+品k-j0 +-a0. (9) Reproduced with permission of the copyright owner.Further reproduction prohibited without permission.Reproduced with permission of the copyright owner. Further reproduction prohibited without permission