Behavioral Finance -- Contents -- Preface -- Introduction -- Part One Introduction to Behavioral Finance -- Chapter 1 What Is the Efficient Market Hypothesis? -- Information and the Efficient Market Hypothesis -- Random Walk, the Martingale Hypothesis, and the EMH -- False Evidence against the EMH -- What Does It Mean to Disagree with the EMH? -- Chapter 2 The EMH and the "Market Model" -- Risk and Return-the Simplest View -- The Capital Asset Pricing Model (CAPM) -- The CAPM Equation -- The Interpretation of CAPM -- CAPM as an "Accepted" Theory -- What Is the Market Model? -- Chapter 3 The Forerunners to Behavioral Finance -- The Folklore of Wall Street Traders -- The Birth of Value Investing: Graham and Dodd -- Financial News in a World of Ubiquitous Television and Internet -- Part Two Noise Traders -- Chapter 4 Noise Traders and the Law of One Price -- The Law of One Price and the Case of Fungibility -- What If Identical Things Are Not Fungible? -- The Friedman View -- But Noise Traders, if Sufficiently Diverse, May Not Matter -- The Noise Trader Agenda -- Noise -- Fischer Black's 1985 Presidential Address to the American Finance Association -- The Friedman-Black Path for Noise Traders -- Chapter 5 The Shleifer Model of Noise Trading -- The Key Components of the Shleifer Model -- The Assets -- The Market Participants -- Other Details of the Shleifer Model Structure -- The Limits to Arbitrage -- Results -- Why the Shleifer Model Is Important -- Resolving the Limits to Arbitrage Dispute -- Chapter 6 Noise Trading Feedback Models -- The Hirshleifer Model -- The Firm -- The Investors -- The Stakeholders -- Timing -- Results -- The Subrahmanyam-Titman Model -- The Basic Model -- Cascades -- The Feedback Effect -- Conclusion -- Chapter 7 Noise Traders as Technical Traders -- Technical Traders as Noise Traders -- Trend-Following Noise Traders.

Reversal Patterns in Stock Prices -- The Systematic Issue -- Herd Instinct Models -- The Shiller Model -- Abreu-Brunnermeier Model -- Conclusion -- Part Three Anomalies -- Chapter 8 The Rational Man -- Consumer Choice with Certainty -- Consumer Choice with Uncertainty -- The Allais Paradox -- Conclusion -- Chapter 9 Prospect Theory -- The Reference Point -- The S-Curve -- Loss Aversion -- Prospect Theory in Practice -- Drawbacks of Prospect Theory -- Conclusion -- Chapter 10 Perception Biases -- Saliency -- Framing -- Problem 1 -- Problem 2 -- Problem 3 -- Problem 4 -- Anchoring -- Sunk-Cost Bias -- Conclusion -- Chapter 11 Inertial Effects -- Endowment Effect -- Status Quo Effect -- Disposition Effect -- Conclusion -- Chapter 12 Causality and Statistics -- Representativeness -- Conjunction Fallacy -- Reading into Randomness -- Small Sample Bias -- Probability Neglect -- Conclusion -- Chapter 13 Illusions -- Illusion of Talent -- Illusion of Skill -- Illusion of Superiority -- Illusion of Validity -- Conclusion -- Part Four Serial Correlation -- Chapter 14 Predictability of Stock Prices: Fama-French Leads the Way -- Testing the Capital Asset Pricing Model -- A Plug for Value Investing -- Mean Reversion-The De Bondt-Thaler Research -- The Reaction to De Bondt-Thaler -- Why Fama-French Is a Milestone for Behavioral Finance -- Chapter 15 Fama-French and Mean Reversion: Which Is It? -- The Month of January -- Is This Just About Price? -- The Overreaction Theme -- Lakonishok, Shleifer, and Vishnyon Value versus Growth -- Is Overreaction Nothing More Than a "Small Stock" Effect? -- Daniel and Titman on Unpriced Risk in Fama and French -- Summing Up the Contrarian Debate -- Chapter 16 Short-Term Momentum -- Price and Earnings Momentum -- Earnings Momentum-Ball and Brown -- Measuring Earnings Surprises.

Why Does It Matter Whether Momentum Is Priceor Earnings Based? -- Hedge Funds and Momentum Strategies -- Pricing and Earnings Momentum-Are They Realand Do They Matter? -- Chapter 17 Calendar Effects -- January Effects -- The Other January Effect -- The Weekend Effect -- Preholiday Effects -- Sullivan, Timmermann, and White -- Conclusion -- Part Five Other Topics -- Chapter 18 The Equity Premium Puzzle -- Mehra and Prescott -- What About Loss Aversion? -- Could This Be Survivor Bias? -- Other Explanations -- Are Equities Always the Best Portfolio for the Long Run? -- Is the Equity Premium Resolved? -- Chapter 19 Liquidity -- A Securities Market Is a Bid-Ask Market -- Measuring Liquidity -- The Qspread -- Turnover Measure -- Order-Imbalance Measure -- Is Liquidity a Priced Risk for Common Stocks? -- Significance of Liquidity Research -- Chapter 20 Neuroeconomics -- Capuchin Monkeys -- Innateness versus Culture -- Decisions Are Made by the Brain -- Decisions versus Outcomes -- Neuroeconomic Modeling -- More Complicated Models of Brain Activity -- The Kagan Critique -- Conclusion -- Chapter 21 Experimental Economics -- Bubble Experiments -- Endowment Effect and Status Quo Bias -- Calendar Effects -- Conclusion -- Conclusion And the Winner Is? -- The Semi-Strong Hypothesis -Prices Accurately Summarize All Known Public Information -- Malkiel's Interpretation of the Semi-Strong Hypothesis -- Predictability -- Can Prices Change if Information Doesn't Change? -- Is the Law of One Price Valid ? -- Three Research Agendas -- Noise Trader Research -- Decision Making and Psychology-The Kahneman-Tversky Agenda -- Contrarian Investing and Calendar Effects -- The Critics Hold the High Ground -- What Have We Learned? -- Where Do We Go From Here? (What Have We Not Learned?) -- Bubbles and Financial Collapses -- Rethinking Decision Theory Foundations of Finance.

Do Our Biases Have Welfare Implications? -- Can Professional Money Management Provide Value? -- Feedback Effects -- Experimental Economics May Be One of the Most Useful Laboratories -- A Final Thought -- Index.