This book offers a definitive and wide-ranging overview of developments in behavioral finance over the past ten years. In 1993, the first volume provided the standard reference to this new approach in finance--an approach that, as editor Richard Thaler put it, "entertains the possibility that some of the agents in the economy behave less than fully rationally some of the time." Much has changed since then. Not least, the bursting of the Internet bubble and the subsequent market decline further demonstrated that financial markets often fail to behave as they would if trading were truly dominated by the fully rational investors who populate financial theories. Behavioral finance has made an indelible mark on areas from asset pricing to individual investor behavior to corporate finance, and continues to see exciting empirical and theoretical advances.
Advances in Behavioral Finance, Volume II constitutes the essential new resource in the field. It presents twenty recent papers by leading specialists that illustrate the abiding power of behavioral finance--of how specific departures from fully rational decision making by individual market agents can provide explanations of otherwise puzzling market phenomena. As with the first volume, it reaches beyond the world of finance to suggest, powerfully, the importance of pursuing behavioral approaches to other areas of economic life.
The contributors are Brad M. Barber, Nicholas Barberis, Shlomo Benartzi, John Y. Campbell, Emil M. Dabora, Daniel Kent, François Degeorge, Kenneth A. Froot, J. B. Heaton, David Hirshleifer, Harrison Hong, Ming Huang, Narasimhan Jegadeesh, Josef Lakonishok, Owen A. Lamont, Roni Michaely, Terrance Odean, Jayendu Patel, Tano Santos, Andrei Shleifer, Robert J. Shiller, Jeremy C. Stein, Avanidhar Subrahmanyam, Richard H. Thaler, Sheridan Titman, Robert W. Vishny, Kent L. Womack, and Richard Zeckhauser.
Richard H. Thaler is a pioneer in the fields of behavioral economics and finance.
Although his first writings on behavioral economics appeared in 1980, Thaler became more prominent between 1987 and 1990 when he wrote a regular column called “Anomalies”, published in the Journal of Economic Perspectives. In his column he wrote on a myriad of subjects that illustrated the ways in which human behavior seemed to violate traditional economic theories. These columns were later published in the collection The Winner’s Curse.
Daniel Kahneman later cited his joint work with Thaler as a “major factor” in his receiving the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. Commenting on the prize, he said, “The committee cited me ‘for having integrated insights from psychological research into economic science’. Although I do not wish to renounce any credit for my contribution, I should say that in my view the work of integration was actually done mostly by Thaler and the group of young economists that quickly began to form around him.”
Thaler is currently the Ralph and Dorothy Keller Distinguished Service Professor of Behavioral Science and Economics, and Director of the Center for Decision Research, Graduate School of Business, University of Chicago. He previously taught at Cornell University and MIT.
Cass R. Sunstein specializes in constitutional law, regulatory policy, and economic analysis of law. In the academic world, he is by far the most cited law professor in the United States. He has also written for many popular newspapers and magazines, including The New York Times, The Washington Post, The Los Angeles Times, The Boston Globe, The Chicago Tribune, The American Prospect, Time, Harpers, and The New Republic. He has also appeared on many national television and radio shows, including Nightline, Fox News, the ABC Evening News, the NBC Evening News, 20/20, the News Hour, The O’Reilly Factor, and Fresh Air.
Sunstein graduated in 1975 from Harvard College and in 1978 from Harvard Law School magna cum laude. After graduation, he clerked for Justice Thurgood Marshall of the U.S. Supreme Court. Before joining the faculty of the University of Chicago Law School, he worked as an attorney-advisor in the Office of the Legal Counsel of the U.S. Department of Justice. Mr. Sunstein has testified before congressional committees on many subjects, and he has been involved in constitution-making and law reform activities in a number of nations, including Ukraine, Poland, China, South Africa, and Russia. A member of the American Academy of Arts and Sciences, Mr. Sunstein has been Samuel Rubin Visiting Professor of Law at Columbia, visiting professor of law at Harvard, vice-chair of the ABA Committee on Separation of Powers and Governmental Organizations, chair of the Administrative Law Section of the Association of American Law Schools, a member of the ABA Committee on the future of the FTC, and a member of the President's Advisory Committee on the Public Service Obligations of Digital Television Broadcasters.
Mr. Sunstein is author of many articles and a number of books, including Republic.com (2001), Risk and Reason (2002), The Cost-Benefit State (2002), Why Societies Need Dissent (2003), The Second Bill of Rights (2004), Laws of Fear: Beyond the Precautionary Principle (2005), and Worst-Case Scenarios (2007). He is now working on various projects involving the relationship between law and human behaviorread more
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