We propose an extrapolative model of bubbles to explain the sharp rise in prices and
volume observed in historical financial bubbles. The model generates a novel mechanism …

We develop a dynamic theory of" Partial Equilibrium Thinking"(PET), which micro-founds
time-varying price extrapolation. Extrapolative beliefs are present at all times, but only …

We propose a framework based on two ingredients—extrapolative beliefs and the
disposition effect—and show that it can generate the sharp rise in both prices and volume …

Extant theories on the disposition effect are largely silent on most of the disposition-effect
related trading patterns, including the V-shaped probabilities of buying and selling against …

This paper proposes an asset pricing model featuring extrapolative market participation by
retail investors, who increase participation following high market returns and high new …

In an investment experiment, we show variations in information affect belief and decision
behaviors within the information-beliefs-decisions chain. Subjects observe the time series of …

We develop two new, simple measures to quantify active fund decisions at the individual
position level. The intuition is to separate passive rebalancing induced by flows and position …

We propose an intertemporal consumption-saving model by exploring the implications of the
Law of Small Numbers (LSN), a belief heuristic stating that any sample realization of a …

We conduct an eye-tracking study to investigate how investors allocate their attention across
a price chart when predicting future stock prices. Eye-tracking data accurately predict the …

I present a theory of investor selling behavior in which the disposition effect arises because
investors are slow to update their beliefs about the values of the assets they hold. I show …