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 …

A large body of evidence has documented that risk preferences depend nonlinearly on
outcome probabilities. We discuss the foundations and economic consequences of …

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 …

This paper documents a significantly negative cross-sectional relation between left-tail risk
and future returns on individual stocks trading in the US and international countries. We …

To capture the risk-aversion intuition, the standard approach in economics has been to
utilize the model of expected utility, in which risk aversion derives from diminishing marginal …

We offer a new social approach to investment decision making and asset prices. Investors
discuss their strategies and convert others to their strategies with a probability that increases …

We find that among stocks dominated by retail investors, the lottery anomaly is amplified by
high investor attention (proxied by high analyst coverage, salient earnings surprises, or …

We hypothesize that when investors pay less attention to financial markets, they rationally
allocate relatively more attention to market-level information than to firm-specific information …

We hypothesize that individual investors treat trading as a fun and exciting gambling activity,
implying substitution between this activity and alternative gambling opportunities. To …

Research from psychology suggests that people evaluate fluent stimuli more favorably than
similar information that is harder to process. Consistent with fluency affecting investment …