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A Theory of Fads, Fashion, Custom, and Cultural Change as Informational Cascades
An informational cascade occurs when it is optimal for an individual, having observed the actions of those ahead of him, to follow the behavior of the preceding individual without regard to his own… Expand
Presentation Slides for 'Investor Psychology and Security Market Under and Overreactions'
We propose a theory of securities market under- and overreactions based on two well-known psychological biases: investor overconfidence about the precision of private information; and biased… Expand
Investor Psychology and Asset Pricing
- D. Hirshleifer
- 26 February 2001
The basic paradigm of asset pricing is in vibrant flux. The purely rational approach is being subsumed by a broader approach based upon the psychology of investors. In this approach, security… Expand
Good Day Sunshine: Stock Returns and the Weather
Psychological evidence and casual intuition predict that sunny weather is associated with upbeat mood. This paper examines the relationship between morning sunshine in the city of a country's leading… Expand
Learning from the behavior of others : conformity, fads, and informational cascades
Learning by observing the past decisions of others can help explain some otherwise puzzling phenomena about human behavior. For example, why do people tend to converge on similar behavior? Why is… Expand
Are Overconfident CEOs Better Innovators
Using options- and press-based proxies for CEO overconfidence (Malmendier and Tate 2005a, 2005b, 2008), we find that over the 1993-2003 period, firms with overconfident CEOs have greater return… Expand
Driven to Distraction: Extraneous Events and Underreaction to Earnings News
Recent studies propose that limited investor attention causes market underreactions. This paper directly tests this explanation by measuring the information load faced by investors. The "investor… Expand
Limited Attention, Information Disclosure, and Financial Reporting
This paper models firms’ choices between alternative means of presenting information, and the effects of different presentations on market prices when investors have limited attention and processing… Expand
When citing this paper, please use the following: Hirshleifer D, 2014. Title. Annu. Rev. Econ. 7,: Submitted. Doi: 10.1146/annurev-financial-092214-043752
Do Investors Overvalue Firms with Bloated Balance Sheets?
If investors have limited attention, then accounting outcomes that saliently highlight positive aspects of a firm's performance will promote high market valuations. When cumulative accounting value… Expand