CONTENTS
Preface xi Richard H. Thaler
Acknowledgments xix List of Abbreviations xxiii
Chapter 1 A Survey of Behavioral Finance 1 Nicholas Barberis and Richard H. Thaler
Part I Limits to Arbitrage
Chapter 2 The Limits of Arbitrage 79
Andrei Shleifer and Robert W. Vishny
Chapter 3 How Are Stock Prices Affected by the Location of
Trade? 102
Kenneth A. Froot and Emil M. Dabora
Chapter 4 Can the Market Add and Subtract? Mispricing in Tech
Stock Carve-outs 130
Owen A. Lamont and Richard H. Thaler
Part II Stock Returns and the Equity Premium
Chapter 5 Valuation Ratios and the Long-run Stock Market
Outlook: An Update 173
John Y. Campbell and Robert J. Shiller
Chapter 6 Myopic Loss Aversion and the Equity
Premium Puzzle 202
Shlomo Benartzi and Richard H. Thaler
Chapter 7 Prospect Theory and Asset Prices 224 Nicholas Barberis, Ming Huang, and Tano Santos
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Part III Empirical Studies of Overreaction and Underreaction
Chapter 8 Contrarian Investment, Extrapolation, and Risk 273 Josef Lakonishok, Andrei Shleifer, and Robert W. Vishny
Chapter 9 Evidence on the Characteristics of Cross-sectional
Variation in Stock Returns 317
Kent Daniel and Sheridan Titman
Chapter 10 Momentum 353 Narasimhan Jegadeesh and Sheridan Titman
Chapter 11 Market Efficiency and Biases in Brokerage
Recommendations 389
Roni Michaely and Kent L. Womack
Part IV Theories of Overreaction and Underreaction
Chapter 12 A Model of Investor Sentiment 423 Nicholas Barberis, Andrei Shleifer, and Robert W. Vishny
Chapter 13 Investor Psychology and Security Market
Under- and Overreaction 460
Kent Daniel, David Hirshleifer, and Avanidhar Subrahmanyam
Chapter 14 A Unified Theory of Underreaction, Momentum
Trading, and Overreaction in Asset Markets 502
Harrison Hong and Jeremy C. Stein
Part V Investor Behavior
Chapter 15 Individual Investors 543 Brad M. Barber and Terrance Odean
Chapter 16 Naive Diversification Strategies in Defined
Contribution Savings Plans 570
Shlomo Benartzi and Richard H. Thaler
Part VI Corporate Finance
Chapter 17 Rational Capital Budgeting in an Irrational World 605 Jeremy C. Stein
CONTENTS ix Chapter 18 Earnings Management to Exceed Thresholds 633
François Degeorge, Jayendu Patel, and Richard Zeckhauser
Chapter 19 Managerial Optimism and Corporate Finance 667 J. B. Heaton
List of Contributors 685 Index 695
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