Investors who use biased information from news media subsequently tend to make irrational decisions about acquiring firm-specific information compared to rational expectations. This model of information acquisition yields testable predictions that are verified by using a novel dataset. First,...

The trading app Robinhood maintains a list of the 100 stocks most widely held by its users. Using a novel dataset of stock popularity with Robinhood user, I focus on new securities that enter the list. I document the strong effect that salience of new Top 100 listing events has on the attention...

I extend the Brunnermeier and Pedersen (2005) predatory trading model with the level-k thinking solution concept to investigate the possibility of arbitraging arbitrageurs. For some parameter values, financial predators play a relatively docile unique Nash equilibrium strategy and prices do not...

We provide new evidence on the role of management guidance in explaining earnings announcement-period returns. We show that guidance practices changed around the financial crisis in ways likely to affect the information content of guidance bundled with earnings. Managers provide guidance for a...

Using a novel natural experiment, we provide causal evidence on how asset prices are affected when the media draws investor attention to stale information. We find that shortly after the announcement of a high-profile financial analyst award, stocks with preexisting recommendations from analysts...

We explore the effects of fundamental extrapolation on stock returns. Empirically, we propose a novel approach to extrapolate firms' fundamental information and find that a strategy based on fundamental extrapolation earns an average return of 0.80% per month. Theoretically, we show that...

We study the effects of the investment horizon on asset price volatility using a Learning to Forecast experiment. We end that, for short investment horizons, participants coordinate on self-fulfilling trend extrapolating predictions. Price deviations are then reinforced and amplified, possibly...

This study examines how seismic shocks impact mortgage lenders' risk perception and therefore change their credit decisions. We find that noticeable but non-damaging earthquakes affected lenders' pricing and sales strategies but not credit accessibility. Lenders were more likely to sell loans...

We show that cryptocurrency markets are plagued by pump-and-dump manipulation, with at least 355 cases in seven months. Unlike stock market manipulators, cryptocurrency manipulators openly declare their intentions to pump specific coins, rather than trying to deceive investors. Puzzlingly,...

Expectation anchors are price levels that traders use as indications of whether the market is over- or under-priced. I develop the theory behind this well-documented behavioral notion, leading to the class of periodic demand functions. With a large number of heterogeneous agents, prices become...