This paper demonstrates that preferred stock may arise as an optimal security in a tax-induced equilibrium. This result is driven by graduated tax schedules and by uncertainty. In a more general sense, our results can be interpreted as a template for including any security with a different tax...

One of the most intriguing questions in insurance is the preference of consumers to buy low or no deductible insurance policies. This stands in sharp contrast to the theorem, proved by Mossin, 1968, that when the price of insurance is higher than its actuarial value, then under quite reasonable...

This paper compares the trading patterns of amateur and professional investors during the days following the weekend. The comparison is based on all the daily transactions of a sample of both amateurs and professionally managed investors in a major brokerage house in Israel from 1994 to1998. We...

In this paper, we analyze the investment patterns of a large number of clients of a major Israeli brokerage house during 1994. We compare the behavior of clients making independent investment decisions to that of investors whose accounts were managed by brokerage professionals. Our main...

We study herding behavior of amateur and professional investors using a unique data-set consisting of all their daily transactions during a four-year period, and explore the factors that can explain such behavior and examine to what extent is herding information-driven. We distinguish between...

This paper explores the impacts of managerial overconfidence on the structure of executive compensation, managerial effort, and the welfare of stockholders and managers. Our findings help explain two puzzling corporate finance phenomena. The viability of managerial overconfidence is perplexing...