A behavioral representative investor who evaluates a single risky asset based on cumulative prospect theory will often induce high kurtosis, negative skewness, and persistent autocorrelation into the distribution of market returns even if the asset payoffs are merely a sequence of independent coin tosses. These findings continue to hold even when the investor is simply loss averse.

In previous models of (cumulative) prospect theory reference-dependence of preferences is imposed beforehand and the location of the reference point is exogenously determined. This note provides a foundation of prospect theory, where reference-dependence is derived from preference conditions and a unique reference point arises endogenously.

Abstract Racial reckoning in response to racial injustice has compelled individuals, organizations, and institutions acknowledge adopt policies that actively challenge injustice. A central tenet of this era is it no longer acceptable ignore racist behaviors expressions. To the extent active opposition prejudice an effective strategy for individuals pursue, we examine individual inclinations act...