We investigate why spreads on corporate bonds are so much larger than expected losses from default. Systematic factors make very little contribution to spreads, even if higher moments or downside effects are taken into account. Instead we find that sizes of spreads are strongly related to idiosyncratic-risk factors: not only to idiosyncratic equity volatility, but even more to idiosyncratic bon...

Expected utility maximization is not a good predictive model of how people value outcomes. One of the ways in which people systematically deviate from expected utility maximization is loss aversion, where losses (relative to some reference point) are more highly weighted than gains. I investigate whether and how the theoretical guarantees of congestion games change when the agents are assumed t...

Decision-making under uncertainty is pervasive. This work sought to understand the role of working memory (WM) in loss sensitivity by utilizing two widely used tasks, the Iowa Gambling Task (IGT) and the Soochow Gambling Task (SGT), and manipulating WM with a dual-task paradigm. We hypothesized that WM load would reduce attention to both loss value and frequency in the decision-making tasks. To...

capital asset pricing, as one of the basic theories in finance and investment area, develop a model for estimation of expected rate of return and equity cost of capital. this model has many applications in the field of finance. one of anomalies in the capital asset pricing model is the value premium that its proponents believe this risk premium is compensation for a risk not mentioned in origin...