Two behavioral concepts, loss aversion and mental accounting, have been combined to provide a theoretical explanation of the equity premium puzzle. Recent experimental evidence supports the theory, as students' behavior has been found to be consistent with myopic loss aversion (MLA). Yet, much like certain anomalies in the realm of riskless decision-making, these behavioral tendencies may be attenuated among professionals. Using traders recruited from the CBOT, we do indeed find behavioral differences between professionals and students, but rather than discovering that the anomaly is muted, we find that traders exhibit behavior consistent with MLA to a "greater" extent than students. Copyright 2005 by The American Finance Association.

Abstract:In settings characterized by imperfect information about an underlying state of nature, but where inferences are made sequentially and are publicly observable, decisions may yield a "cascade" in which everyone herds on a single choice. While cascades potentially play a role in a variety of settings, from technology adoption to social processes such as mate selection, understanding cascade phenomena is imperative for financial markets. Previous empirical efforts studying cascade formation have used both naturally occurring data and laboratory experiments. In this paper, we combine two of the attractive elements of each line of research-observation of Chicago Board of Trade market professionals in a controlled environment-to push the investigation of cascade behavior into several new directions. Numerous empirical insights are obtained; perhaps most importantly we find that market professionals behave quite differently than a control group of college student subjects. In particular, the market professionals base their decisions on the "quality" of the public signal to a greater extent than do students, leading professionals to be more likely to disregard "bad" signals. And, unlike in the case with students, for market professionals, the propensity to be Bayesian does not differ significantly across the gain and loss domains.

Amidst a sharp rise in commodity investing, many have asked whether commodities nowadays move in sync with traditional financial assets. We provide evidence that challenges this idea. Using dynamic correlation and recursive cointegration techniques, we find that the relation between the returns on investable commodity and U.S. equity indices has not changed significantly in the last fifteen years. We also find no evidence of any secular increase in co-movement between the returns on commodity and equity investments during periods of extreme returns. JEL Classification: G10, G13, L89Keywords: Commodities, Equities, Dynamic conditional correlations, DCC, Cointegration, Extreme-event returns.

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Swimming endurance of haddock (Melanogrammus aeglefinus L.) at prolonged and sustained swimming speeds, and its role in their capture by towed fishing gears. d ICES Journal of Marine Science, 61: 1071e1079.This paper describes an experiment to determine the swimming endurance of haddock (Melanogrammus aeglefinus) at prolonged swimming speeds. Fish were stimulated to swim in a circular path around an annular tank, using a moving light pattern to trigger the optomotor response. Individually tagged haddock (length range 16.0e40.2 cm) swam in groups over a range of speeds (0.3e0.9 m s ÿ1 ) and at a constant temperature (9.85 G 0.07(C). Endurance of individual fish was shown to be related to their swimming speed and length. However, there was also significant variation (p ! 0.05) in the performance of fish of approximately equal length. Distinct behaviours and swimming gaits were also identified and associated with the performance of individual fish. The inverselinear model is introduced, as an alternative to the log-linear model, for describing the relationship between swimming speed and endurance, and estimating maximum sustainable swimming speed (U ms ). Estimates of U ms ranged from 0.38 G 0.03 m s ÿ1 and 3.16 G 0.02 BL s ÿ1 (for a 16.0-cm fish) to 0.62 G 0.04 m s ÿ1 and 1.51 G 0.07 BL s ÿ1 (for a 42.0-cm fish). U ms represents an important threshold in the behavioural physiology of fish, marking the upper limit of aerobic swimming. The relevance of these results and U ms to the fish capture process is discussed.Crown