We examine how stakes affect investor behaviors. In our unique setting, the same investors trade stocks in their real accounts using their own money and, at the same time, trade in a simulated setting. Our real-world within-investor estimation produces strong evidence that investors exhibit...

I present a dynamic equilibrium model of investor sentiment in which investors form beliefs by overly extrapolating past returns. The key contribution of my model is to connect mispricing with investor sentiment through the market impact of extrapolators, and to provide novel insights into the...

We present a new model of asset prices in which the agent has Epstein-Zin preferences and extrapolative beliefs about stock market returns. Unlike earlier return extrapolation models, our model allows for a quantitative comparison with the data on asset prices and expectations. The model...