CHAPTER 2: THE PERILS OF AFFECT
Aspara, Jaakko, and Henrikki Tikkanen. “The Role of Company Affect in Stock Investments: Towards Blind, Undemanding, Noncomparative and Committed Love.” Journal of Behavioral Finance 11, No. 2 (2010): 103–113.
Bateman, I. J., S. Dent, E. Peters, P. Slovic, and C. Starmer. “The Affect Heuristic and the Attractiveness of Simple Gambles.” Journal of Behavioral Decision Making 20, No. 4 (2007): 365–380.
Berns, Gregory S., C. Monica Capra, Jonathan Chappelow, Sara Moore, and Charles Noussair. “Nonlinear Neurobiological Probability Weighting Functions for Aversive Outcomes.” NeuroImage 39 (2008): 2047–2057.
———, C. Monica Capra, Sara Moore, and Charles Noussair. “A Shocking Experiment: New Evidence on Probability Weighting and Common Ratio Violations.” Judgment and Decision Making 2 (2007): 234–242.
Damasio, A. R. Descartes’ Error: Emotion, Reason, and the Human Brain. New York: Penguin, 2005.
Davidson, Richard J., Klaus R. Scherer, and H. Hill Goldsmith, eds. Handbook of Affective Sciences (Series in Affective Science). New York: Oxford University Press, 2002.
Dreman, David N. “Analysts’ Conflicts-of-Interest: Some Behavioral Aspects.” Journal of Behavioral Finance 3, No. 3 (2002): 138–140.
———. “Bubbles and the Role of Analysts’ Forecasts.” Journal of Behavioral Finance 3, No. 1 (2002): 4–14.
———. “The Influence of Affect on Investor Decision-Making.” Journal of Behavioral Finance 5, No. 2 (2004): 70–74.
———. “The Role of Psychology in Analysts’ Estimates.” Journal of Behavioral Finance 2, No. 2 (2001): 66–68.
———, and Michael A. Berry. “Analyst Forecasting Errors and Their Implications for Security Analysis.” Financial Analysts Journal 51, No. 3 (1995): 30–41.
———, and Michael A. Berry. “Overreaction, Underreaction and the Low P/E Effect.” Financial Analysts Journal 51, No. 4 (1995): 21–30.
———, and Eric A. Lufkin. “Do Contrarian Strategies Work Within Industries?” Journal of Investing 6, No. 3 (1997): 7–29.
———, and Eric A. Lufkin. “Investor Overreaction: Evidence That Its Basis Is Psychological.” Journal of Behavioral Finance 1, No. 1 (2000): 61–75.
Engelmann, J. B., C. M. Capra, C. Noussair, and G. S. Berns. “Expert Financial Advice Neurobiologically “Offloads” Financial Decision-Making Under Risk.” PLoS One 4, No. 3 (2009): e4957.
Fischhoff, B., S. Lichtenstein, P. Slovic, S. Derby, and R. Keeney. Acceptable Risk. New York: Cambridge University Press, 1981.
Hirshleifer, David, and Tyler Shumway. “Good Day Sunshine, Stock Returns and the Weather.” Journal of Finance 58, No. 3 (2003): 1009–1032.
Hsee, C. K., and J. Zhang. “General Evaluability Theory: An Analysis of When What We Care About Matters.” Perspectives on Psychological Science 5, No. 4 (2010): 343–355.
Johnson, E. J., and A. Tversky. “Affect, Generalization, and the Perception of Risk.” Journal of Personality and Social Psychology 45 (1983): 20–31.
Kahneman, D., and A. Tversky. “Choices, Values, and Frames.” American Psychologist 4 (1984): 341–350.
———. “Prospect Theory: An Analysis of Decision Under Risk.” Econometrica 47 (1979): 263–291.
Knutson, B., A. Westdorp, E. Kaiser, and D. Hommer. “FMRI Visualization of Brain Activity During a Monetary Incentive Delay Task.” NeuroImage 12, No. 1 (2000): 20–27.
Laibson, David, and Richard Zeckhauser. “Amos Tversky and the Ascent of Behavioral Economics.” Journal of Risk and Uncertainty 16 (1998): 7–47.
Larsen, Jeff T., A. Peter McGraw, Barbara A. Mellers, and John T. Cacioppo. “The Agony of Victory and Thrill of Defeat: Mixed Emotional Reactions to Disappointing Wins and Relieving Losses.” Psychological Science 15, No. 5 (2004): 325–330.
Levy, Adam. “Mapping the Trader’s Brain.” Bloomberg Markets, February 1, 2006, pp. 34–45.
Lowenstein, G., ed. Exotic Preferences: Behavioral Economics and Human Motivation. New York: Oxford University Press, 2007.
———. “Out of Control: Visceral Influences on Behavior.” Organizational Behavior and Human Decision Processes 65, No. 3 (1996): 272–292.
———, Rick Scott, and Jonathan D. Cohen. “Neuroeconomics.” Annual Review of Psychology 59 (2008): 647–672.
MacGregor, D. G. “Imagery and Financial Judgment.” Journal of Psychology and Financial Markets 3 (2002): 15–22.
———, P. Slovic, D. Dreman, and M. Berry. “Imagery, Affect, and Financial Judgment.” Journal of Psychology and Financial Markets 1, No. 2 (2000): 104–110.
Montague, P. Read. “Neuroeconomics: A View from Neuroscience.” Functional Neurology 22, No. 4 (2007): 219–234.
———, and Gregory S. Berns. “Neural Economics and the Biological Substrates of Valuation.” Neuron 36 (2002): 265–284.
Olsen, R. A. “Behavioral Finance as Science: Implications from the Research of Paul Slovic.” Journal of Psychology and Financial Markets 2 (2001): 157–159.
Rangel, Antonio, Colin Camerer, and P. Read Montague. “A Framework for Studying the Neurobiology of Value-Based Decision Making.” Nature Reviews Neuroscience 9 (2008): 545–556.
Shiv, B., and A. Fedorikhin. “Heart and Mind in Conflict: Interplay of Affect and Cognition in Consumer Decision Making.” Journal of Consumer Research 26 (December 1999): 278–282.
Sloman, S. A. “The Empirical Case for Two Systems of Reasoning.” Psychological Bulletin 119, No. 1 (1996): 3–22.
Slovic, Paul. “The Construction of Preference.” American Psychologist 50 (1995): 364–371.
———. “Rational Actors and Rational Fools: The Influence of Affect on Judgment and Decision Making.” Roger Williams University Law Review 6, No. 1 (2000): 163–212.
———. “What’s Fear Got to Do with It? It’s Affect We Need to Worry About.” Missouri Law Review 69 (2004): 971–990.
———. “Risk as Analysis and Risk as Feelings: Some Thoughts About Affect, Reason, Risk, and Rationality.” Risk Analysis 24, No. 2 (2004): 1–12.
———, and S. Lichtenstein. “Relative Importance of Probabilities and Payoffs in Risk Taking.” Journal of Experimental Psychology Monograph 78, No. 3 (1968): 1–18.
———, and E. Peters. “Risk Perception and Affect.” Current Directions in Psychological Science 15, No. 6 (2006): 322–325.
Starr, Chauncey. “Social Benefit Versus Technological Risk.” Science 165, No. 3899 (1969): 1232–1238.
Statman, Meir. “Characteristics, Affect, and Stock Returns.” Santa Clara University Leavey School of Business Research Paper No. 10-06.
CHAPTER 3: TREACHEROUS SHORTCUTS IN DECISION MAKING
Fischhoff, Baruch, Paul Slovic, and Sarah Lichtenstein. “Knowing with Certainty: The Appropriateness of Extreme Confidence.” Journal of Experimental Psychology: Human Perception and Performance 3 (1977): 552–564.
Kahneman, Daniel, and Amos Tversky. “Subjective Probability: A Judgment of Representativeness.” Cognitive Psychology 3, No. 3 (July 1972): 430–454.
Lichtenstein, S., Paul Slovic, B. Fischhoff, M. Layman, and B. Combs. “Judged Frequency of Lethal Events,” Journal of Experimental Psychology: Human Learning and Memory 4 (1978): 551–578.
Nisbett, Richard E., and Timothy DeCamp Wilson. “Telling More Than We Can Know: Verbal Reports on Mental Processes.” Psychological Review 84, No. 3 (1977): 231–259.
CHAPTER 4: CONQUISTADORS IN TWEED JACKETS
Dieckmann, N. F. “Numeracy: A Review of the Literature.” Report No. 08-2. Eugene, Ore.: Decision Research, 2008.
Faro, David, and Yuval Rottenstreich. “Affect, Empathy, and Regressive Mispredictions of Others’ Preferences Under Risk.” Management Science 52, No. 4 (2006): 529–541.
Gilovich, Thomas, Dale Griffin, and Daniel Kahneman, eds. Heuristics and Biases: The Psychology of Intuitive Judgment. New York: Cambridge University Press, 2002.
Kahneman, Daniel, and Jonathan Renshon. “Why Hawks Win.” Foreign Policy (January–February 2007): 34–38.
Kahneman, D., and A. Tversky. “Subjective Probability: A Judgment of Representativeness.” Cognitive Psychology 3 (July 1972): 430–454.
Peters, E., and P. Slovic. “The Springs of Action: Affective and Analytical Information Processing in Choice.” Personality and Social Psychology Bulletin 26 (2000): 1465–1475.
———, Daniel Västfjäll, Paul Slovic, C. K. Mertz, Ketti Mazzocco, and Stephan Dickert. “Numeracy and Decision Making,” Psychological Science 17, No. 5 (2006): 407–413.
Slovic, Paul. “Psychological Study of Human Judgment: Implications for Investment Decision Making.” Journal of Psychology and Financial Markets 2 (2001): 160–172.
CHAPTER 5: IT’S ONLY A FLESH WOUND
Denes-Raj, V., and S. Epstein. “Conflict Between Intuitive and Rational Processing: When People Behave Against Their Better Judgment.” Journal of Personality and Social Psychology 66 (1994): 819–829.
CHAPTER 6: EFFICIENT MARKETS AND PTOLEMAIC EPICYCLES
Cassidy, John. “After the Blowup.” The New Yorker, January 11, 2010.
Dunbar, Nicholas. Inventing Money: The Story of Long-Term Capital Management and the Legends Behind It (New York: Wiley, 2001).
Nocera, Joe. “Poking Holes in a Theory on Markets.” The New York Times, June 5, 2009.
CHAPTER 7: WALL STREET’S ADDICTION TO FORECASTING
Dreman, David N. “Bubble Jr.” Journal of Behavioral Finance 4, No. 4 (2003): 188–190.
Fox, Justin. The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street. New York: Harper Paperbacks, 2011.
Michel-Kerjan, Erwann, and Paul Slovic, eds. The Irrational Economist: Decision Making in a Dangerous World. New York: Public Affairs Press, 2010.
Simon, H. A. “Rational Choice and the Structure of the Environment.” Psychological Review 63 (1956): 129–138.
CHAPTER 8: HOW BIG A LONG SHOT WILL YOU PLAY?
Cummins, L. F., M. R. Nadorff, and A. E. Kelly. “Winning and Positive Affect Can Lead to Reckless Gambling.” Psychology of Addictive Behavior 23, No. 2 (2009): 287–294.
Kuo, W. J., T. Sjöström, Y. P. Chen, Y. H. Wang, and C. Y. Huang. “Intuition and Deliberation: Two Systems for Strategizing in the Brain.” Science 324, No. 5926 (2009): 519–522.
Van Dillen, L. F., D. J. Heslenfeld, and S. L. Koole, “Tuning Down the Emotional Brain: An fMRI Study of the Effects of Cognitive Load on the Processing of Affective Images.” NeuroImage 45, No. 4 (2009): 1212–1219.
CHAPTER 9: NASTY SURPRISES AND NEUROECONOMICS
Bayer, H. M., and P. W. Glimcher. “Midbrain Dopamine Neurons Encode a Quantitative Reward Prediction Error Signal.” Neuron 47 (2005): 129–141.
Berns, Gregory S., Samuel M. McClure, Giuseppe Pagnoni, and P. Read Montague. “Predictability Modulates Human Brain Response to Reward.” Journal of Neuroscience 21, No. 8 (2001): 2793–2798.
Chua, H. F., R. Gonzalez, S. F. Taylor, R. C. Welsh, and I. Liberzon. “Decision-Related Loss: Regret and Disappointment,” NeuroImage 47, No. 4 (2009): 2031–2040.
Cowen, T. “Enter the Neuro-Economists: Why Do Investors Do What They Do?” The New York Times, April 20, 2006, p. C3.
Cromwell, H. C., and W. Schultz. “Effects of Expectations for Different Reward Magnitudes on Neuronal Activity in Primate Striatum.” Journal of Neurophysiology 89 (2003): 2823–2838.
Daw, N. D., and K. Doya. “The Computational Neurobiology of Learning and Reward.” Current Opinion in Neurobiology 16 (2006): 199–204.
Doya, K. “Modulators of Decision Making.” Nature Neuroscience 11, No. 4 (2008): 410–416.
Dunn, B. D., T. Dalgleish, and A. D. Lawrence. “The Somatic Marker Hypothesis: A Critical Evaluation.” Neuroscience and Biobehavioral Reviews 30, No. 2 (2006): 239–271.
Elliott, R., K. J. Friston, and R. J. Dolan. “Dissociable Neural Responses in Human Reward Systems.” Journal of Neuroscience 20, No. 16 (2000): 6159–6165.
Fiorillo, C. D., P. N. Tobler, and W. Schultz. “Discrete Coding of Reward Probability and Uncertainty by Dopamine Neurons.” Science 299 (2003): 1898–1902.
Hollerman, J. R., and W. Schultz. “Dopamine Neurons Report an Error in the Temporal Prediction of Reward During Learning.” Nature Neuroscience 1 (1998): 304–309.
Kobayashi, S., and W. Schultz. “Influence of Reward Delays on Responses of Dopamine Neurons.” Journal of Neuroscience 28 (2008): 7837–7846.
Lee, D. “Neural Basis of Quasi-Rational Decision Making.” Current Opinion in Neurobiology 16, No. 2 (2006): 191–198.
Liu, X., D. K. Powell, H. Wang, B. T. Gold, C. R. Corbly, and J. E. Joseph. “Functional Dissociation in Frontal and Striatal Areas for Processing of Positive and Negative Reward Information.” Journal of Neuroscience 27, No. 17 (2007): 4587–4597.
Livet, P. “Rational Choice, Neuroeconomy and Mixed Emotions.” Philosophical Transactions of the Royal Society, London (B: Biological Sciences) 365, No. 1538 (2010): 259–269.
Loewenstein, George, Scott Rick, and Jonathan D. Cohen, “Neuroeconomics.” Annual Review of Psychology 59 (2008): 647–672.
Martin, L. E., G. F. Potts, P. C. Burton, and P. R. Montague. “Electrophysiological and Hemodynamic Responses to Reward Prediction Violation.” Neuroreport 20, No. 13 (2009): 1140–1143.
Mirenowicz, J., and W. Schultz. “Importance of Unpredictability for Reward Responses in Primate Dopamine Neurons.” Journal of Neurophysiology 72 (1994): 1024–1027.
———. “Preferential Activation of Midbrain Dopamine Neurons by Appetitive Rather Than Aversive Stimuli.” Nature 379 (1996): 449–451.
Montague, P. R. “Neuroeconomics: A View from Neuroscience.” Functional Neurology 22, No. 4 (2007): 219–234.
———, P. Dayan, and T. Sejnowski. “A Framework for Mesencephalic Dopamine Systems Based on Predictive Hebbian Learning.” Journal of Neuroscience 16, No. 5 (1996): 1936–1947.
Sanfey, A. G., G. Loewenstein, S. M. McClure, and J. D. Cohen. “Neuroeconomics: Cross-Currents in Research on Decision-Making.” Trends in Cognitive Sciences 10, No. 3 (2006): 108–116.
Schultz, W. “Behavioral Theories and the Neurophysiology of Reward.” Annual Review of Psychology 57 (2006): 87–115.
———. “Introduction. Neuroeconomics: The Promise and the Profit.” Philosophical Transactions of the Royal Society, London (B: Biological Sciences) 363, No. 1511 (2008): 3767–3769.
———. “Predictive Reward Signal of Dopamine Neurons.” Journal of Neurophysiology 80 (1998): 1–27.
———, P. Dayan, and P. R. Montague. “A Neural Substrate of Prediction and Reward.” Science 275 (1997): 1593–1599.
Shiv, B., G. Loewenstein, and A. Bechara. “The Dark Side of Emotion in Decision-Making: When Individuals with Decreased Emotional Reactions Make More Advantageous Decisions.” Brain Research. Cognitive Brain Research 23, No. 1 (2005): 85–92.
Tobler, P. N., C. D. Fiorillo, and W. Schultz. “Adaptive Coding of Reward Value by Dopamine Neurons.” Science 307 (2005): 1642–1645.
Werner, N. S., S. Duschek, and R. Schandry. “Relationships Between Affective States and Decision-Making.” International Journal of Psychophysiology 74, No. 3 (2009): 259–265.
Wu, C. C., P. Bossaerts, and B. Knutson. “The Affective Impact of Financial Skewness on Neural Activity and Choice.” PLoS One 6, No. 2 (2011): e16838.
CHAPTER 10: A POWERFUL CONTRARIAN APPROACH TO PROFITS
Basu, Sanjoy. “The Effect of Earnings Yield on Assessments of the Association Between Annual Accounting Income Numbers and Security Prices.” Accounting Review 53 (1978): 599–625.
———. “Investment Performance of Common Stocks in Relation to Their Price-Earnings Ratios: A Test of the Efficient Markets Hypothesis.” Journal of Finance 32 (1977): 663–682.
———. “The Relationship Between Earnings’ Yield, Market Value and Return for NYSE Common Stocks: Further Evidence.” Journal of Financial Economics 12 (1983): 129–156.
Dreman, David. Contrarian Investment Strategies: The Next Generation. New York: Simon and Schuster, 1998.
———. Contrarian Investment Strategy. New York: Random House, 1979.
———. The New Contrarian Investment Strategy. New York: Random House, 1982.
———, and Michael Berry. “Overreaction, Underreaction and the Low P/E Effect.” Financial Analysts Journal (1995): 21–30.
———, and Eric Lufkin. “Investor Overreaction: Evidence That Its Basis Is Psychological.” Journal of Psychology and Financial Markets 1, No. 1 (2000): 61–75.
CHAPTER 11: PROFITING FROM INVESTORS’ OVERREACTIONS
Abarbanell, J. S., and V. L. Bernard. “Tests of Analysts’ Overreaction/Underreaction to Earnings Information as an Explanation for Anomalous Stock Price Behavior.” Journal of Finance 47 (1992): 1181–1207.
Amir, Eli, and Yoav Ganzach. “Overreaction and Underreaction in Analysts’ Forecasts.” Journal of Economic Behavior and Organization 37 (1998): 333–347.
Daniel, K. D., D. Hirshleifer, and A. Subrahmanyam. “Investor Psychology and Security Market Under- and Overreactions.” Journal of Finance 53, No. 6 (1998): 1839–1886.
De Bondt, Werner F. M., and Richard Thaler. “Does the Stock Market Overreact?” Journal of Finance 40, No. 3 (1985): 793–805.
———. “Do Security Analysts Overreact?” American Economic Review 80, No. 2 (1990): 52–57.
———. “Further Evidence on Investor Overreaction and Stock Market Seasonality.” Journal of Finance 42, No. 3 (1987): 557–581.
Drehmann, Mathias, Jörg Oechssler, and Andreas Roider. “Herding and Contrarian Behavior in Financial Markets: An Internet Experiment.” American Economic Review 95, No. 5 (2005): 1403–1426.
Dreman, David N., and Michael A. Berry. “Overreaction, Underreaction, and the Low-P/E Effect.” Financial Analysts Journal 51, No. 4 (1995): 21–30.
———, and Eric A. Lufkin. “Do Contrarian Strategies Work Within Industries?” Journal of Investing 6, No. 3 (1997): 7–29.
Jegadeesh, N., and S. Titman. “Overreaction, Delayed Reaction, and Contrarian Profits.” Review of Financial Studies 8 (1995): 973–993.
Lakonishok, J., A. Shleifer, and R. Vishny. “Contrarian Investment, Extrapolation, and Risk.” Journal of Finance 49, No. 5 (1994): 1541–1578.
CHAPTER 12: CONTRARIAN STRATEGIES WITHIN INDUSTRIES
Bali, Turan G., K. Ozgur Demirtas, Armen Hovakimian, and John J. Merrick, Jr. “Peer Pressure: Industry Group Impacts on Stock Valuation Precision and Contrarian Strategy Performance.” Journal of Portfolio Management 32, No. 3 (2006): 80–92.
Dreman, David N., and Eric A. Lufkin. “Do Contrarian Strategies Work Within Industries?” Journal of Investing 6, No. 3 (1997): 7–29.
CHAPTER 14: TOWARD A BETTER THEORY OF RISK
Coleman, William Oliver. The Causes, Costs, and Compensations of Inflation: An Investigation of Three Problems in Monetary Theory. Northampton, Mass.: Edward Elgar Publishing, 2007.
CHAPTER 15: THEY’RE GAMBLING WITH YOUR MONEY
Acharya, Viral V., Thomas F. Cooley, Matthew P. Richardson, Richard Sylla, and Ingo Walter. Regulating Wall Street: The Dodd-Frank Act and the New Architecture of Global Finance. New York: Wiley Finance, 2010.
Tatom, John A. Financial Market Regulation: Legislation and Implications. New York, Dordrecht, Heidelberg, London: Springer, 2011.
CHAPTER 16: THE NOT-SO-INVISIBLE HAND
Fletcher, Ian. Free Trade Doesn’t Work: What Should Replace It and Why, 2011 Edition. Washington, D.C.: U.S. Business and Industry Council.