Herd behavior arises in many instances of information technology (IT) adoption. Our study examines the economic and behavioral basis for herd behavior and decision conformity. We investigate the roles of payoff externalities, observational learning and managerial incentives in influencing IT adoption decisionmaking. Our study underscores the benefits of viewing various drivers of IT adoption he...

This study investigates whether the adverse e¤ects of investors’behavioral biases extend beyond the domain of …nancial markets to the broad macro-economy. We focus on the risk sharing (or income smoothing) role of …nancial markets and demonstrate that risk sharing levels are higher in U.S. states in which investors have higher cognitive abilities and exhibit weaker behavioral biases. Further, s...

It is well known that when agents are fully rational, compulsory public insurance may make all agents better o¤ in the Rothschild and Stiglitz (1976) model of insurance markets. We …nd that when su¢ ciently many agents underestimate their personal risks, compulsory insurance makes low-risk agents worse o¤. Hence, behavioral biases may weaken some of the well-established rationales for governmen...

The authors discuss the general steps involved in good decision making and use those steps to organize results from behavioral decision research, illustrating some of the challenges in making important choices. Framing effects, self serving biases, and context effects are a few of the errors and biases presented. The authors also discuss a variety of techniques for reducing biases and errors. T...

This paper develops a model of weight assignments using a pseudo-Bayesian approach that reflects investors’ behavioral biases. In this parsimonious model of investor sentiment, weights induced by investors’ conservative and representative heuristics are assigned to observations of the earning shocks of stock prices. Such weight assignments enable us to provide a quantitative link between some m...

-This study explores the personality traits, perceived personal control, behavioral biases, culture, and socio-demographics in determining individual equity investor’s risk assumption attitude. The study uses a survey approach to collect responses from small equity investors. A conceptual model is developed and hypotheses are tested through structure equation model (SEM). The result identifies ...

This paper develops a model of weight assignments using a pseudo-Bayesian approach that reflects investors’ behavioral biases. In this parsimonious model of investor sentiment, weights induced by investors’ conservative and representative heuristics are assigned to observations of the earning shocks of stock prices. Such weight assignments enable us to provide a quantitative link between some m...