Investor behavior and financial markets

This dissertation is a collection of three independent research articles that investigate how investor behavior shapes financial markets as well as obtaining a better understanding of that behavior. The dissertation has three main findings. First risk predictability is an important driver of assets prices, the higher the predictability of a given risk, the higher the degree to which it’s reflected in asset prices. Second, higher investor protection standards can protect retail investors from making costly decisions. Finally, organizing professional money managers in teams can reduce the extent to which they let their behavioral biases guide poor investment decisions