Heterogeneous Beliefs, Market Environment and IPO Underpricing

IPO under pricing is always the focus of finance theory and practice. According to behavioral finance, this paper explores the inherent process of IPO under pricing from microscopic investor behavior and market environment by constructing an agent-based computational model. The conclusions show that the uppermost causation for severe IPO under pricing is the presence of crazy investors and hot market environment rather than the beliefs divergence. So it is necessary to strengthen the information disclosure and investors' education.