Several authors have reported an unconditional size effect in returns around earnings announcements. In this study we show how this finding can be understood as resulting from ambiguity aversion. We hypothesize that analyst forecasts for smaller companies are relatively more ambiguous; hence...

Marketers have a choice of what to tell consumers and consumers must consider what they are told or not told. Across six experiments, we show that consumers fail to differentiate between deliberate and non-deliberate missing information (strategic naiveté) and make generous inferences when they...

We describe the DRIFT model, a heuristic description of framing effects in intertemporal choice, and four experiments testing its implications. In the experiments we vary how outcomes are framed – either as total interest earned, as the rate of interest or, as is traditionally done in studies...

We design an experiment to test the hypothesis that, in violation of Bayes Rule, some people respond more forcefully to the strength of information than to its weight. We provide incentives to motivate effort, use naturally occurring information, and control for risk attitude. We find that the...

Behavioural finance theories draw on evidence from psychology that suggest that some people respond to information in a biased manner, and construct theories of inefficient markets. However, these biases are not always robust when tested in economic conditions, which casts doubt on their...

Little is known about how consumers form CSR perceptions of the organizations they buy from. We propose that one way is through a CSR halo effect, whereby consumer awareness of some of a firm's CSR initiatives influences their judgments and preferences with regard to CSR in other areas about...

Decision makers often make snap judgments using fast-and-frugal decision rules called cognitive heuristics. Research into cognitive heuristics has been divided into two camps. One camp has emphasized the limitations and biases produced by the heuristics; another has focused on the accuracy of...

Hyperbolic discounting of delayed rewards has been proposed as the underlying cause of the failure to stick to plans to forego one's immediate desires, such as the plan to diet, wake up early, or quit taking heroin. These planning failures could, however, result from other mechanisms that prior...