Mind on My Money

How to invest wisely

John Nofsinger is an associate professor of finance at Washington State University and a speaker, writer, and scholar on behavioral finance. See full bio

July 7, 2008

Analytical/Intuitive Thinking: PART III, Risk Aversion

One of the principles of Prospect Theory is that people do not have a constant risk aversion. In other words, people may avoid risk in some instances and seek risk in others. We buy lottery tickets (risk seeking) and car insurance (risk avoidance). How does an analytical or intuitive thinking mode impact situational risk aversion? Read More

July 4, 2008

401(k) Investing: Do We Learn From Others’ Mistakes?

Before 2001, employees invested too much of their 401(k) plan money in their company's stock. Then we heard all about the dilemma of Enron employees who lost their jobs and most of their retirement funds. Did the rest of us learn from their mistakes? Read More

July 3, 2008

Analytical/Intuitive Thinking: PART II, Know Yourself!

There are many decision-making activities in which it may be better to be an intuitive thinker. Other situations favor analytical thinkers. This posting reports the answers to the PART I CRT quiz questions. Are you an analytical or intuitive thinker? Read More

July 3, 2008

Analytical/Intuitive Thinking: PART I, Determine Your Thinking Process

People who use a primarily analystical thinking mode seem to make different decisions than intuitive people when faced with decisions under risk and uncertainty. To determine your thinking mode, take his Cognitive Reflection Test (CRT). Read More

July 1, 2008

High Returns and Low Risk?

One of the foundational financial theories is that expected return and risk are positively correlated. In other words, high risk goes with high expected return. But people tend to believe the opposite, that risk and expected return are negatively correlated. They believe that the stocks they like will earn high expected return with low risk! Read More

June 29, 2008

What Was Your Portfolio Return?

What was your portfolio return last calendar year? Most investors don't know the answer to this question. But their belief in their performance is quite flattering to themselves! If you don't know that you are doing poorly as an investor, you won't learn from your mistakes! Read More

Books by John Nofsinger, Ph.D.

Psychology of Investing (3rd Edition)

Behavioral Economics Basics

Why do we often think we know what we want, only to be disappointed with our purchases and choices? Behavioral economics studies just how irrational we humans can be.

Go to the Behavioral Economics Basics page for more on Behavioral Economics including:

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Books by John Nofsinger, Ph.D.

Behavioral Economics Basics

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