We develop a positive behavioral portfolio theory (BPT) and explore its implications for
portfolio constrution and security design. The optimal portfolios of BPT investors resemble …

This paper develops a capital asset pricing theory in a market where noise traders interact
with information traders. Noise traders are traders who commit cognitive errors while …

Market efficiency is at the center of the battle of standard finance versus behavioral finance
versus investment professionals. But the battle is not joined because the term “market …

Conversations about socially responsible investing are difficult because they combine facts
with beliefs. Proponents of socially responsible investing believe that combining social goals …

We show that a well-diversified portfolio of randomly chosen stocks must include at least 30
stocks for a borrowing investor and 40 stocks for a lending investor. This contradicts the …

Typical socially responsible investors tilt their portfolios toward stocks of companies with
high scores on social responsibility characteristics and shun stocks of companies associated …

The well-known tendency of investors to favor cash dividends emerges quite naturally in
two new theories of choice behavior [the theory of self-control due to Thaler and Shefrin (1981), …

The levels of diversification in US investors' equity portfolios present a puzzle. Today's optimal
level of diversification, measured by the rules of mean–variance portfolio theory, exceeds …

One of the most significant and unique features in Kahneman and Tversky's approach to
choice under uncertainty is aversion to loss realization. This paper is concerned with two …

Investors get no more tax benefits from the realization of losses in December than in November
or any other month. Indeed, Shefrin and Statman (1985) showed that it makes rational …