Behavioral finance is an approach to finance, not a subfield.

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• Behavioral finance is an approach to finance, not
  a sub-field.

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Behavioral Finance

• Investor Welfare
• Asset markets
• Volume
• Returns
• Corporate Finance

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Behavioral Finance(Psychology)

• Framing of Investment Options
• Overconfidence
• Loss Aversion
• Attention

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Framing of Investment Options Investor Welfare

• The 1/N Heuristic
• Benartzi and Thaler (AER, March 2001)
• Investment in Employer Stock
• Benartzi (JF, forthcoming)
• Savings Plans
• Benartzi and Thaler (2001 working paper)

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Overconfidence Investor Welfare, Trading Volume,
Asset Pricing, Corporate Finance

• Theoretical Models
• Odean (JF, 1998)
• Daniel, Hirshleifer, Subrahmanyam (JF, 1998)
• Empirical Evidence
• Odean (AER, 1999)
• Barber and Odean (JF, 2000 QJE, 2001 RFS, 2002)
• Corporate
• Heaton, QJE, 2002
• Gervais, Heaton, and Gervais (2002, working
  paper)
• Malmendier Tate (2002, working paper)

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Loss Aversion Investor Welfare, Asset Pricing
(?), Corporate Finance(?)

• Stocks
• Statman and Shefrin (JF, 1985)
• Odean (JF, 1998)
• Grinblatt and Keloharju (JF, 2000)
• Real Estate
• Genesove and Mayer (1999)
• Futures
• Locke and Mann (1999)
• Employee Stock Options
• Heath, Huddart, and Lang (QJE, 1999)

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Attention Investor Welfare, Asset Pricing (?)

• Barber and Odean (2002, working paper)

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• Psychology Investor behavior
  Asset price models

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Behavioral FinanceThe Role of Anomalies

• Anomalies are not Behavioral Finance
• The analysis of long-run returns is treacherous
• but robust anomalies lead to a better
  understanding of financial markets

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The Robust Anomalies

• Value
• Price Momentum
• Post-Earnings Announcement Drift
• The Size Effect (?)

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Behavioral Financeas Good Science

• Data Dredging and Story Telling
• Model Dredging and Story Telling
• Know the Psychology Literature

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General Comments

• Pick your research topics well
• Ask (and answer) focused research questions
• Shop your ideas with other scholars
• Execution
• Write well
• Avoid clutter (in methods and words)
• Listen!

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General Comments

• Topics
• Interest
• Focus
• Presentation
• Writing
• Interviews
• Seminars