1.2 Organization: How the Ideas in This Book Tie Together
Heuristics and Representativeness: Experimental Evidence
2 Representativeness and Bayes Rule: Psychological Perspective
2.1 Explaining Representativeness
2.2 Implications for Bayes Rule
2.4 Representativeness and Prediction
3 Representativeness and Bayes Rule: Economics Perspective
3.1 The Grether Experiment
4 A Simple Asset Pricing Model Featuring Representativeness
4.1 First Stage, Modified Experimental Structure
4.2 Expected Utility Model
4.5 Second Stage: Signal-Based Market Structure
5 Heterogeneous Judgments in Experiments
5.2 Heterogeneity in Predictions of GPA
5.3 The De Bondt Experiment
5.4 Why Some Bet on Trends and Others Commit Gambler's Fallacy
Heuristics and Representativeness: Investor Expectations
6 Representativeness and Heterogeneous Beliefs Among Individual Investors, Financial Executives, and Academics
6.2 The Expectations of Academic Economists
7 Representativeness and Heterogeneity in the Judgments of Professional Investors
7.1 Contrasting Predictions: How Valid?
7.2 Update to Livingston Survey
7.3 Individual Forecasting Records
7.5 Why Heterogeneity Is Time Varying
Developing Behavioral Asset Pricing Models
8 A Simple Asset Pricing Model with Heterogeneous Beliefs
8.1 A Simple Model with Two Investors
8.3 Fixed Optimism and Pessimism
8.4 Incorporating Representativeness
9 Heterogeneous Beliefs and Inefficient Markets
9.1 Defining Market Efficiency
9.2 Market Efficiency and Logarithmic Utility
9.3 Equilibrium Prices as Aggregators
9.4 Market Efficiency: Necessary and Sufficient Condition
9.5 Interpreting the Efficiency Condition
10 A Simple Market Model of Prices and Trading Volume
10.3 Analysis of Trading Volume
11 Efficiency and Entropy: Long-Run Dynamics
11.1 Introductory Example
11.3 Numerical Illustration
11.5 Heterogeneous Time Preference, Entropy, and Efficiency
11.6 Entropy and Market Efficiency
Heterogeneity in Risk Tolerance and Time Discounting
12 CRRA and CARA Utility Functions
12.3 Constant Relative Risk Aversion
