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3. Heyman, J. E., Y. Orhun, and D. Ariely. 2004. “Auction Fever: The Effectof Opponents and Quasi-endowment on Product Valuations.” Journalof Interactive Marketing 18(4): 7–21.
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6. Chen, K., V. Lakshminarayanan, and L. Santos. 2006. “How Basic AreBehavioral Biases? Evidence from Capuchin Monkey Trading Behav-ior.” Journal of Political Economy, June 2006.
7. Ibid.8. Harbaugh, W. T., K. Krause, and L. Vesterlund. 2002. “Prospect Theoryin Choice and Pricing Tasks,” University of Oregon Economics Depart-ment Working Papers 2002–02, University of Oregon Economics De-partment, revised December 17, 2003.
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20. Personal e-mail communication with Hersh Shefrin, September 21,2006. Shefrin commented: “The key driver of the shift in risk attitudeis that the person segregates the two gains, the prior gain and the gainfrom the gamble. That kick from savoring the gains separately providesa psychological impetus to taking the gamble, given the cushion pro-vided by the prior gain.”
21. Liu, Y-J., C-L. Tsai, M-C. Wang, and N. Zhu. 2006. “House Money Effect:Evidence from Market Makers at Taiwan Futures Exchange” (April).http://faculty.gsm.ucdavis.edu/∼nzhu/papers/housemoney.pdf.
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23. Drobny, S. 2006. Inside the House of Money. Hoboken, N.J.: John
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24. Ibid., p. 40.25. Ibid., p. 42.26. Ibid., p. 47.27. Ibid., p. 48.28. Ibid., p. 43.29. Ibid., pp. 50–51.30. Jones, P. T. 1989. In Schwager, J. Market Wizards: Interviews with Top
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31. Seasholes, M. S., and L. Feng. 2005. “Do Investor Sophistication andTrading Experience Eliminate Behavioral Biases in Financial Mar-kets?” June 6. Available at SSRN: http://ssrn.com/abstract=694769.
32. “The Taming of the Shrewd.” The Economist, May 6, 2000.33. Ibid.34. Schwager, J. 1989. Market Wizards: Interviews with Top Traders. New
York: Institute of Finance, p. 126.
35. Ibid., p. 127.36. Szala, G., and J. Reerink. 1994. “Tip-offs from Top Traders.” Futures,
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2. Gray, J. R. 1999. “A Bias toward Short-Term Thinking in Threat-RelatedNegative Emotional States.” Personality and Social Psychology Bul-letin 25: 65–75.
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7. Mischel, W., Y. Shoda, M. I. Rodriguez. 1989. “Delay of Gratiﬁcation in
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16. Grant, J. E. “Outcome Study of Kleptomania Patients Treated withNaltrexone: A Chart Review.” Clinical Neuropharmacology 28(1)(January–February): 11–14.
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19. Ariely, D., J. Cohen, K. Ericson, et al. 2006. “Implementing Self-Control.” Poster presentation at the Society for Neuroeconomics 2006annual meeting. Park City, Utah.
20. See note 4.21. Ariely, D., and K. Wertenbroch. 2002. “Procrastination, Deadlines, andPerformance: Self-Control by Precommitment.” Psychological Science13(3): 219–224.
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Chapter 17: Herding
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4. Ibid., p. 128.5. Solnick, S. J., and D. Hemenway D. 1998. “Is More Always Better? Asurvey on positional concerns.” Journal of Economic Behavior andOrganization 37(3): 373–383. The authors surveyed 155 students and79 staff and faculty at Harvard’s School of Public Health in 1995 to de-termine how important were positional concerns.
6. Cialdini, p. 118.7. Warneryd, K-E. 2001. Stock Market Psychology. Northhampton, Mass.:
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15. Blodget, H. 2004. “Wall Street Self-Defense. Born Suckers: The Greatest
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22. Chen, Q., and W. Jiang. 2006. “Analysts; Weighting of Private and Public
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23. Shefrin, H. 2006. Behavioral Corporate Finance: Decisions that Create
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Chapter 18: Charting and Data Mining
1. Sagan, C. 1983. Broca’s Brain. New York: Ballantine Books.2. Lewis, M. 2003. Moneyball. New York: W. W. Norton.3. Leinweber, D. 1997. “Stupid Data Mining Tricks: Over-ﬁtting the S&P
500.” First Quadrant Monograph.
4. “Keeping Cool Amid Global Strife.” Wall Street Journal, Money and
Investing, July 17, 2006, p. C1.
5. Goldstein, S. 1994. “Watch What You’re Thinking!” Skeptical Inquirer,
June 22.
6. Ibid.7. Osler, C., and K. Chang. 1995. “Head and Shoulders: Not Just a Flaky
Pattern.” Federal Reserve Bank of New York. Staff Report No. 4.
8. Lo, A., H. Mamaysky, and J. Wang. 2000. “Foundations of TechnicalAnalysis: Computational Algorithms, Statistical Inference, and Empiri-cal Implementation.” Journal of Finance 55: 1705–1765.
9. Ibid.10. Ibid., p. 11.11. DeBondt, W. 1993. “Betting on Trends: Intuitive Forecasts of FinancialRisk and Return.” International Journal of Forecasting 9(3) (Novem-ber): 355–371.
12. Schachter, S., R. Ouellette, B. Whittle, and W. Gerin. “Effects of Trendand of Proﬁt or Loss on the Tendency to Sell Stock.” Basic and AppliedSocial Psychology 8: 259–271.
13. Johnson, J., G. Tellis, D. Macinnis. 2005. “Winners. Losers, and BiasedTrades” Journal of Consumer Research, v32, September, pp324–329.14. Trope, Y., and Liberman, N. 2003. “Temporal Construal.” Psychological
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15. Mussweiler, T., and K. Schneller. 2003. “What Goes up Must ComeDown”—How Charts Inﬂuence Decisions to Buy and Sell Stocks.”Journal of Behavioral Finance 4,(3): 121–130.
16. Ibid.17. Ibid.18. Downloaded on October 1, 2006, from: www.irrationalexuberance.
com/deﬁnition.htm.
19. Shiller, R. J. 2000. Irrational Exuberance. Princeton, N.J.: Princeton
University Press.
20. Mankiw, N. G. 2000. “First Principles: How Irrational Is Our Exuber-
ance?” Fortune, April 17.
21. Greenspan, A. 1996. “The Challenge of Central Banking in a Demo-cratic Society.” Speech presented to the Annual Dinner and FrancisBoyer Lecture of The American Enterprise Institute for Public Pol-icy Research, Washington, D.C., December 5. www.federalreserve.gov/BOARDDOCS/SPEECHES/19961205.htm.
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22. See note 18.23. Data obtained from Hersh Shefrin PowerPoint presentation to the 2005
T. Rowe Price Investment Symposium.
24. Chiu, Y-C., C-H. Lin, J-T. Huang, et al. 2005. “Immediate Gain Is Long-Term Loss: Are There Foresighted Decision Makers in Iowa GamblingTask?” Paper presented at the Society for Neuroeconomics 3rd AnnualMeeting, Kiawah Island, South Carolina, September 15–18.
25. Chiu Y-C, C-H. Lin, S. Lin, and J-T. Huang. 2006. “Reexamining theEffect of Long-Term Outcome and Gain-Loss Frequency: From Un-certainty to Certainty.” Paper presented at the Society for Neuroeco-nomics 4th Annual Meeting, Park City, Utah.
26. See note 24.27. See note 25.28. Personal communication with Ching-Hung Lin at the 4th Annual Meet-
ing of Society of Neuroeconomics, Park City, Utah.
29. Delgado, M. R., M. M. Miller, S. Inati, and E. A. Phelps. 2005. “An fMRIStudy of Reward-Related Probability Learning.” NeuroImage, 24(3):862–873.
30. Kaestner, M. 2006. “Investors Misreaction to Unexpected Earnings:Evidence of Simultaneous Overreaction and Underreaction” ICFAIJournal of Behavioral Finance 3(1) (March). Available at SSRN:http://ssrn.com/abstract=877246.
31. Gladwell, M. 2002. “Blowing Up.” The New Yorker, April 22–29, 2002.
www.gladwell.com/2002/2002 04 29 a blowingup.htm.
32. Ibid.
Chapter 19: Attention and Memory
1. Kumar, A., and R. Dhar. 2001. “A Non-Random Walk Down the MainStreet: Impact of Price Trends on Trading Decisions of Individual In-vestors.” Yale School of Management Working Papers ysm208, YaleSchool of Management.
2. Welch, I. 2000. “Views of Financial Economists on the Equity Premiumand Other Issues.” Journal of Business 73(4) (October): 501–537.3. Welch I. 2001. “The Equity Premium Consensus Forecast Revisited”(September). Cowles Foundation Discussion Paper No. 1325. Availableat SSRN: http://ssrn.com/abstract=285169.
4. Adcock, R. A., A. Thangavel, S. Whitﬁeld-Gabrieli, et al. 2006. “Reward-Motivated Learning: Mesolimbic Activation Precedes Memory Forma-tion.” Neuron 50: 507–517.
5. Hassabis, D., D. Kumaran, S. D. Vann, and E. A. Maguire. 2007. “Patientswith hippocampal amnesia cannot imagine new experiences.” Proceed-ings of the National Academy of Sciences 104: 1726–1731.
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6. Slovic, P., and B. Fischhoff. 1977. “On the Psychology of Experimen-tal Surprises.” Journal of Experimental Psychology: Human Perfor-mance and Perception. 3: 544–551.
7. Knutson, B., and J. C. Cooper. 2006. “The Lure of the Unknown.” Neu-
ron 51: 280–282.
8. Schweitzer, J. B., D. O. Lee, R. B. Hanford, et al. 2004. “Effect ofMethylphenidate on Executive Functioning in Adults with Attention-Deﬁcit/Hyperactivity Disorder: Normalization of Behavior but NotRelated Brain Activity.” Biological Psychiatry 56(8) (October 15):597–606.
9. Knutson, B., J. M. Bjork, G. W. Fong, et al. 2004. “Amphetamine Modu-
lates Human Incentive Processing.” Neuron 43: 261–269.
10. Scheres, A., M. P. Milham, B. Knutson, and F. X. Castellanos.2007. “Ventral Striatal Hyporesponsiveness during Reward Predictionin Attention-Deﬁcit/Hyperactivity Disorder.” Biological Psychiatry.(March 1) 61(5):720–724.
11. 11. Cooper, M., H. Gulen, and P. R. Rau. 2005. “Changing Names withStyle: Mutual Find Name Changes and Their Effects on Fund Flows.”Journal of Finance 60(6) (December): 2825–2858.
12. Head, A., G. Smith, and J. Wilson. 2006. “Would a Stock by Any OtherTicker Smell as Sweet?” Working paper. www.economics.pomona.edu/GarySmith/Econ190/tickers.pdf#search=%22Would%20a%20Stock%20By%20Any%20Other%20Ticker%20Smell%20as%20Sweet%3F%22.
13. Valentino, J. 2006. “Does Stock by Any Other Name Smell as Sweet?”
Wall Street Journal, September 28, p. C1.
14. Alter, A. A., and D. M. Oppenheimer DM. 2006. “Predicting Short-TermStock Fluctuations by Using Processing Fluency.” Proceedings of theNational Academy of Sciences 103: 9369–9372 (published online be-fore print June 5 2006, 10.1073/pnas.0601071103).
15. Ibid.16. See note 12.17. Busse, J., and T. Green. 2002. “Market Efﬁciency in Real Time.” Journal
of Financial Economics 65: 415–437.
18. Barber, B. M., and T. Odean. 2005. “All that Glitters: The Effect of Atten-tion and News on the Buying Behavior of Individual and InstitutionalInvestors” (March 2006). EFA 2005 Moscow Meetings Paper. Availableat SSRN: http://ssrn.com/abstract=460660.
19. Hirshleifer, D., J. N. Myers, L. A. Myers, and S. H. Teoh. 2004. “Do Indi-vidual Investors Drive Post-Earnings Announcement Drift? Direct Evi-dence from Personal Trades.” Working paper, EconWPA.
20. Seasholes, M., and G. Wu. 2006. “Predictable Behavior, Proﬁts, and At-
tention.” Working paper. http://faculty.haas.berkeley.edu/mss/
21. Amihud, Y., and H. Mendelson. 1987. “Trading Mechanisms and StockReturns: Empirical Investigation.” Journal of Finance 42(3): 533–553.
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22. Atkins, A., and E. Dyl. 1990. “Price Reversals, Bid-Ask Spreads, andMarket Efﬁciency.” Journal of Financial and Quantitative Analysis25: 535–547.
23. George, T. J., and C. Y. Hwang. 1995. “Transitory Price Changes andPrice-Limit Rules: Evidence from the Tokyo Stock Exchange.” Journalof Financial and Quantitative Analysis 30: 313–327.
24. See note 20.
Chapter 20: Age, Sex, and Culture
1. Canli, T., J. E. Desmond, Z. Zhao, and J. Gabrieli. 2002. “Sex Differencesin the Neural Encoding of Emotional Experiences.” Proceedings of theNational Academy of Sciences 99(16): 10789–10794.
2. Hamann, S., and T. Canli. 2004. “Individual Differences in Emotion Pro-
cessing.” Current Opinion in Neurobiology 14: 233–238.
3. Shansky, R. M., K. Rubinow, A. Brennan, and A. F. Arnsten. 2006. “TheEffects of Sex and Hormonal Status on Restraint-Stress-Induced Work-ing Memory Impairment.” Behavior and Brain Function 7(2) (March):8.
4. Amin, Z., C. N. Epperson, R. T. Constable, and T. Canli. 2006. “Effectsof Estrogen Variation on Neural Correlates of Emotional Response In-hibition.” Neuroimage, April 25 (Epub ahead of print).
5. Rilling, J., D. Gutman, T. Zeh, et al. 2002. “A Neural Basis for Social
Cooperation.” Neuron 35: 395–405.
6. de Quervain, D. S., U. Fischbacher, V. Treyer, et al. 2004. “The neu-ral basis of altruistic punishment.” Science. 305(5688) (August 27):1254–1258.
7. Odean, T., and B. Barber. 2001. “Boys Will Be Boys: Gender, Overcon-ﬁdence, and Common Stock Investment.” Quarterly Journal of Eco-nomics 116(1) (February): 261–292.
8. Ibid.9. Nicholson, N., M. Fenton-O’Creevy, E. Soane, and P. Willman. 2006.“Risk Propensity and Personality.” http://facultyresearch.london.edu/docs/risk.ps.pdf.
10. Miller, E. K. 2000