Most real world market participants are professional portfolio managers (PPM), which means that they are not managing their own money, but rather managing money for other people (e.g. mutual funds, pension funds). This situation generates an agency feature which has relevant consequences, as...

The objective of this paper is twofold. The first is to incorporate mental accounting, loss aversion, asymmetric risk-taking behavior, and probability weighting in a multi-period portfolio optimization for individual investors. While these behavioral biases have previously been identified in the...

Recent literature has advocated that risk-taking behavior is influenced by prior monetary gains and losses. On one hand, after perceiving monetary gains, people are willing to take more risk (house-money effect). Another stream of the literature, based on prospect theory and loss aversion,...

Standard models of moral hazard predict a negative relationship between risk and incentives; however empirical studies on mutual funds present mixed results. In this paper, we propose a behavioral principal-agent model in the context of professional managers, focusing on active and passive...

Credit rating is an index for classifying credit risk that attributes scores based on investor trust and confidence in the company issuing bonds in the financial market. This article studies rating as signs of default (insolvency) in companies. Fitch Ratings was used due to the transparency of...

We employ a lab experiment to test whether subjects have overconfidence. We find evidence suggesting that: in general men have a larger degree of overconfidence, and that both age and experience have some influence in the degree of overconfidence

This paper tests the illusion of control in a lab experiment. We test the phenomena with undergraduate students and find little evidence of systematic differences due to gender. These results suggest that cultural differences may play a role and that generalization using lab experiments should...