Individual investors select high-fee index mutual funds despite the fact that the future payouts are nearly identical. We offer an explanation for this violation of the Law of One Price based on investor desire to diversify. While diversification in some settings may be beneficial, in the case...

Popular wisdom regarding athletics is that offenses are at a relative disadvantage in the early portion of seasons. We present evidence that this anecdotal belief holds true over the 2000-2010 National Football League (NFL) seasons. This is reflected in lower offensive yardage, fewer first...

Behavioral theories contend that the human decision-making process tends to both incorporate anchor points and improperly weight low probability events. In this study, we find evidence that equity option market investors anchor to prices and incorporate a probability weighting function similar...