We find that individual investors who use technical analysis and trade options frequently make poor portfolio decisions, resulting in dramatically lower returns than other investors. The data on which this claim is based consists of transaction records and matched survey responses of a sample of...

Finance is in the midst of a paradigm shift, from a neoclassical based framework to a psychologically based framework. Behavioral finance is the application of psychology to financial decision making and financial markets. Behavioralizing finance is the process of replacing neoclassical...

We are in the midst of what might end up as the most significant change to financial regulations since the Great Depression. This is because the financial and economic crisis that continues to engulf us is the most severe crisis since the Great Depression. The markets for houses, mortgages, and...

We estimate investors' sentiment from option and stock prices by anchoring objective beliefs to a neoclassical pricing kernel. Our estimates of sentiment correlate well with other sentiment measures such as the Baker–Wurgler index, the Yale/Shiller crash confidence index and the Duke/CFO...

This paper examines corporate risk taking behavior in the wake of unsuccessful merger activities. We find that relative to other firms, firms that made bad acquisitions take both more systematic risk and more idiosyncratic risk. Moreover, higher risk is associated with greater value destruction...

A juxtaposition of the key ideas in Hyman Minsky's writings against passages from the Financial Crisis Inquiry Commission makes clear that Minsky's main ideas about economic instability were prescient. Nevertheless, Minsky did not provide a well defined model of his framework, which might be one...

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,...

This original book takes psychological research, experimental economics, and recent business scenarios to provide both students and practitioners with the insights to develop a strong risk management strategy. Shefrin draws on his previous research into characterizing organizational culture...