Behavioral finance studies the application of psychology to finance, with a focus on
individual-level cognitive biases. I describe here the sources of judgment and decision …

Abstract In 1979, Daniel Kahneman and Amos Tversky, published a paper in Econometrica
titled “Prospect Theory: An Analysis of Decision under Risk.” The paper presented a new …

Behavioral development economics applies theories and ideas from psychology and
behavioral economics to the study of questions in development economics. We begin by …

This paper constructs a manager sentiment index based on the aggregated textual tone of
corporate financial disclosures. We find that manager sentiment is a strong negative …

Behavioral finance tries to make sense of financial data using models that are based on
psychologically accurate assumptions about people's beliefs, preferences, and cognitive …

The last several decades have witnessed a shift away from a fully rational paradigm of
financial markets toward one in which investor behavior is influenced by psychological …

We provide an overview of research on the stock trading behavior of individual investors.
This research documents that individual investors (1) underperform standard benchmarks …

Contrary to basic finance principles, high-beta and high-volatility stocks have long
underperformed low-beta and low-volatility stocks. This anomaly may be partly explained by …

Household finance—the normative and positive study of how households use financial
markets to achieve their objectives—has gained a lot of attention over the past decade and …

Financial decisions are among the most important life-shaping decisions that people make.
We review facts about financial decisions and what cognitive and neural processes …