David Hirshleifer

Who they are

Hirshleifer is Distinguished Professor of Finance and Business Economics and holds the Robert G. Kirby Chair in Behavioral Finance at the USC Marshall School of Business. He is a Fellow and former President of the American Finance Association, a former Executive Editor of the Review of Financial Studies, an associate of the National Bureau of Economic Research and a former director of the American Finance Association and the Western Finance Association. USC reports that he is the first USC faculty member inducted as a Financial Management Association Fellow.

This site cites a second paper of his, the 2003 study of stock returns and the weather written with Tyler Shumway.

Key papers

Hirshleifer, D., Levi, Y., Lourie, B., & Teoh, S. H. (2019). Decision fatigue and heuristic analyst forecasts. Journal of Financial Economics, 133(1), 83-98. doi:10.1016/j.jfineco.2019.01.005

Hirshleifer, D., & Shumway, T. (2003). Good day sunshine: stock returns and the weather. Journal of Finance, 58(3), 1009-1032. doi:10.1111/1540-6261.00556

Key ideas

The 2019 paper starts from psychology research suggesting that people decide worse after a long run of decisions and tests the idea on financial analysts, who often issue several forecasts in a day. Its abstract reports that forecast accuracy falls as the number of forecasts already issued that day rises, and that analysts who have issued more are more likely to use simple heuristics: following the consensus, repeating their own earlier forecasts and issuing rounded forecasts. The abstract also reports that the stock market appears to discount forecasts to allow for decision fatigue.

This site reads the paper at abstract level. It is an observational record of behaviour across a working day and does not isolate the mechanism behind it.

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