Behavioral finance endeavors to bridge the gap between neoclassical finance and cognitive psychology. Now an established field, behavioral finance looks at the investors' decision making formula as well as at their behavior, which in turn sheds light on the observed departures from the...

The relationship between risk and return lies at the heart of modern finance. This relationship is embodied within such core concepts as the capital market line and the security market line. Both of these graphs feature a positive slope, meaning that the higher the risk the higher the expected...

6/22/00: web retrieval--abstract only--KathyUniversity of WashingtonSchool of Business AdministrationJournal of Financial and Quantitative Analysishttp://depts.washington.edu/jfqa/Vol. 35, No. 2, June 2000Behavioral Portfolio TheoryHersh Shefrin and Meir StatmanAbstract:We develop a positive...

We know from empirical studies that stocks of small companies with high book-to-market ratios have provided higher returns than stocks of large companies with low book-to-market ratios. But do senior executives, outside directors and financial analysts believe that? We show that senior...

More than twenty years ago, Meir Statman and I coined the term disposition effect to describe the predisposition of investors to sell their winners too early and to ride their losers too long. We identified a series of psychological phenomena that we believed explained the disposition effect,...

There was unfinished business to address in the version of the planner-doer model developed in Thaler and Shefrin (1981). The unfinished business involved identifying and modeling the crucial roles played by temptation and mental accounting in pensions and savings behavior. The present paper has...