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Uncertainty: Heuristics and Biases, D. Kahneman, P. Slovic, and A. Tversky, eds.
(Cambridge: Cambridge University Press, 1982), 154.
8. Svenson, O., “Are We All Less Risky and More Skillful Than Our Fellow Drivers?”
Acta Psychologica 47 (1981): 143“148.
9. Ross, M. and F. Sicoly, “Egocentric Biases and Availability and Attribution,” Journal
of Personality and Social Psychology 37 (1979): 322“336.
10. Peters, T.J., In Search of Excellence (New York: Harper & Row, 1982), 56.
11. Lichtenstein, S., B. Fischhoff, et al., “Calibration of Probabilities,” Judgment under
Uncertainty: Heuristics and Biases, D. Kahneman, P. Slovic, and A. Tversky, eds.
(Cambridge: Cambridge University Press, 1982), 306“334.
12. Roth, G. and M. Wulliman, eds., Brain Evolution and Cognition (New York: Wiley,
2001), chapters 16 and 17.
13. Minsky, M.L., The Society of Mind (New York: Simon and Schuster, 1986).
14. Lech, R.B., Broken Soldiers (Urbana: University of Illinois Press, 2000).
15. Cialdini, R.B., Influence: The Psychology of Persuasion, rev. ed. (New York:
Quill/William Morrow, 1993).
16. Gazzaniga, M., The Mind™s Past (Berkeley: University of California Press, 1998).
17. McGurk, H. and J. MacDonald, “Hearing Lips and Seeing Voices,” Nature 264
(1976): 746“748.
18. Harlow, J.M., Recovery from the Passage of an Iron Bar through the Head (Boston:
David Clapp & Son, 1869).
19. Thaler, R.H., The Winner™s Curse: Paradoxes and Anomalies of Economic Life
(Princeton, NJ: Princeton University Press, 1992); Gilovich, T., D. Griffin, et al.,
eds., Heuristics and Biases: The Psychology of Intuitive Judgment. (Cambridge:
Cambridge University Press, 2002).
20. Schwager, J., Market Wizards: Interviews with Top Traders (New York: Prentice Hall
Press, 1989), 117“140.
21. Guth, W., R. Schmittberger, et al., “An Experimental Analysis of Ultimatum Bar-
gaining,” Journal of Economic Behavior and Organization 3, no. 4, (1982): 367“388.
22. Roth, A.E., “Bargaining Experiments,” Handbook of Experimental Economics, J.H.
Kagel and A.E. Roth, eds. (Princeton, NJ: Princeton University Press, 1995). Roth,
A.E., V. Prasnikar, et al., “Bargaining and Market Behavior in Jerusalem, Ljubljana,
Pittsburgh, and Tokyo: An Experimental Study,” American Economic Review 81, no.
5, (1991): 1068“1095.
23. Hoffman, E., K. McCabe, et al., “On Expectations and the Monetary Stakes in Ulti-
matum Games,” International Journal of Game Theory 25 (1996): 289“301.
24. Cameron, L., “Raising the Stakes in the Ultimatum Game: Experimental Evidence
from Indonesia,” Economic Inquiry 37, no. 1, (1999): 47“59.
Endnotes 291



25. Henrich, J., R. Boyd, et al., “In Search of Homo economicus: Behavioral Experiments
in 15 Small-Scale Societies,” American Economic Review 91, no. 2, (2001): 73“78.
26. Sanfey, A.G., J.K. Rilling, et al., “The Neural Basis of Economic Decision-Making
in the Ultimatum Game,” Science 300 (2003): 1755“1758.
27. Burnham, T.C., “Pride, Status and Hormones: Rejectors in an Ultimatum Game Have
High Levels of Testosterone” manuscript, 2004.
28. Kahneman, D. and A. Tversky, “Choices, Values, and Frames,” American Psycholo-
gist 39, no. 4, (1984): 341“50.
29. Leeson, N. with E. Whitley, Rogue Trader: How I Brought down Barings Bank and
Shook the Financial World (Boston: Little Brown, 2000).
30. Skinner, B.F., “˜Superstition™ in the Pigeon,” Journal of Experimental Psychology 38
(1947): 168“172.
31. Tversky, A. and D. Kahneman, “Judgment Under Uncertainty: Heuristics and
Biases,” Science 185 (1974): 1124“1131.
32. Laibson, D., “Golden Eggs and Hyperbolic Discounting,” The Quarterly Journal of
Economics 112, no. 2, (1997): 443“477.

Chapter 3 Crazy World
1. Smith, V.L., “An Experimental Study of Competitive Market Behavior,” The Journal
of Political Economy 70 (1962): 111“137.
2. Bachelier, L., Th©orie de la Sp©culation (Paris: Gauthier-Villars, 1900).
3. Bernstein, P., Capital Ideas: The Improbable Origins of Modern Wall Street (New
York: Free Press, 1992).
4. Malkiel, B., A Random Walk Down Wall Street (New York: Norton, 1973).
5. Siegel, J.J., Stocks for the Long Run, 2nd ed. (New York: McGraw-Hill, 1998).
6. MacKay, C., Memoirs of Extraordinary Popular Delusions (London: R. Bentley,
1841).
7. Shiller, R., Irrational Exuberance (Princeton, NJ: Princeton University Press, 2000).
8. Shiller, R., “Investor Behavior in the 1987 Stock Market Crash: Survey Evidence,”
Cowles Foundation Discussion Papers (#853), 1987.
9. Siegel, J., “The Stock Market Crash of 1987: A Macro-Finance Perspective,” Rodney
L. White Center for Financial Research Working Papers (#24-88), 1988.
10. Smith, V.L., G.L. Suchanek, et al., “Bubbles, Crashes and Endogenous Expectations
in Experimental Spot Asset Markets,” Econometrica 56 (1988): 1119“1151.
11. Investment Company Institute, www.ici.org, 2004 fact book, 88.
12. “The Death of Equities: Why the Age of Equities May Be Over,” Business Week
(August 13, 1979).
13. Investment Company Institute, www.ici.org, 2004 fact book, 88.
292 Endnotes



14. Prechter, R., Conquer the Crash: You Can Survive and Prosper in a Deflationary
Depression (Hoboken, New Jersey: John Wiley & Sons, 2002), Figure 7.1.
15. Odean, T., “Do Investors Trade Too Much?” American Economic Review 89 (1999):
1279“1298.
16. De Bondt, W. and R. Thaler, “Does the Stock Market Overreact?” Journal of Finance
40 (1985): 793“808.
17. Thaler, R., ed., Advances in Behavioral Finance (New York: Russell Sage Founda-
tion, 1993).
18. Berkshire Hathaway annual report 2003, 2.
19. Fuller & Thaler Asset Management, www.fullerthaler.com.
20. Popper, K., The Logic of Scientific Discovery (London: Hutchinson, 1959).
21. Tobias, A., Money Angles (New York: Linden Press, 1984).
22. Asch, S., “Studies of Independence and Conformity: 1. A Minority of One against a
Unanimous Majority,” Psychological Monographs 70 (1956): 1“70.
23. Profet, M., “The Evolution of Pregnancy Sickness as Protection to the Embryo
against Pleistocene Teratogens,” Evolutionary Theory 8 (1988): 177“190.
24. Lo, A., and D. Repin, “The Psychophysiology of Real-Time Financial Risk Process-
ing,” Journal of Cognitive Neuroscience 14 (2002): 323“339.

Chapter 4 U.S. Economic Snapshot
1. Keynes, J.M., “Economic Possibilities of Our Grandchildren,” Essays in Persuasion
(London: Macmillan, 1972).
2. Federal Reserve, www.federalreserve.gov.
3. Bureau of Economic Analysis, www.bea.gov, Table 2.1.
4. Bureau of Labor Statistics, www.bls.gov, Foreign Labor Statistics.
5. Schwarzenegger Press Conference, August 20, 2003.
6. Office of Management and Budget, Congressional Budget Office, see Figure 7.4 of
this book.
7. Bureau of Labor Statistics, www.bls.gov.
8. Office of Management and Budget, Congressional Budget Office, see Figure 7.3 of
this book.
9. Darwin, C., On the Origin of Species by Means of Natural Selection, or the Preser-
vation of Favoured Races in the Struggle for Life (London: John Murray, 1859),
Chapter 3.
10. Diener, E., “Cross-Cultural Correlates of Life Satisfaction and Self-esteem,” Journal
of Personality and Social Psychology 68, no. 4 (1995): 653“664. Diener, E., E. Sand-
vik, et al., “The Relationship Between Income and Subjective Well-being: Relative or
Absolute?” Social Indicators Research 28, no. 3 (1993): 195“224.
Endnotes 293




Chapter 5 Inflation
1. Friedman, M., and A.J. Schwartz, A Monetary History of The United States:
1867“1960 (Cambridge: National Bureau of Economic Research, 1963), 695.
2. Roth, A.E., and X. Xing, “Turnaround Time and Bottlenecks in Market Clearing:
Decentralized Matching in the Market for Clinical Psychologists,” Journal of Politi-
cal Economy 105 (1997): 284“329.
3. Friedman, M., and A.J. Schwartz, A Monetary History of The United States:
1867“1960 (National Bureau of Economic Research, 1963), 696.
4. Quiggin, A., A Survey of Primitive Money; The Beginning of Currency (London:
Methuen, 1907), 250.
5. Einzig, P., Primitive Money in Its Ethnological, Historical, and Economic Aspects,
2nd ed. (New York: Pergamon Press, 1966), 310.
6. Angell, N., The Story of Money (Garden City, NY: Garden City Publishing Company,
1929), 88“89.
7. Mankiw, N.G., Macroeconomics, 5th ed., (New York: Worth Publishers, 2003), 79.
8. Connolly, B., and R. Anderson, First Contact. New Guinea™s Highlanders Encounter
the Outside World (New York: Viking Penguin, 1987).
9. Ringer, F., The German Inflation of 1923 (London: Oxford University Press, 1969).
10. Bopp, K., “Hjalmar Schacht: Central Banker,” The University of Missouri Studies
xiv, no. 1 (1939): 13.
11. Bresciani-Turroni, C., The Economics of Inflation; A Study of Currency Depreciation
in Post-War Germany (New York: A. M. Kelley, 1968).
12. Tyran, J., and E. Fehr, “Limited Rationality and Strategic Interaction”The Impact of
the Strategic Environment on Nominal Inertia,” University of St. Gallen Department
of Economics working paper series, 2002.
13. Bernanke, B.S., and K. Carey, “Nominal Wage Stickiness and Aggregate Supply in
the Great Depression,” Quarterly Journal of Economics 111 (1996): 853“883.
Bordo, M.D., C.J. Erceg, et al., “Money, Sticky Wages and the Great Depression,”
American Economic Review 90 (2000): 1447“1463.
14. Fischer, S., “Why Are Central Banks Pursuing Long-Run Price Stability?” in Achiev-
ing Price Stability (a symposium sponsored by the Federal Reserve Bank of Kansas
City, 1996), 7“34.
15. Summers, L., “Commentary: Why Are Central Banks Pursuing Long-Run Price
Stability?” in Achieving Price Stability (a symposium sponsored by the Federal
Reserve Bank of Kansas City, 1996), 35“43.
16. Wincott Memorial Lecture, London, September 16, 1970.
17. Federal Reserve, www.federalreserve.gov; see Figures 6.3 and 6.4 of this book.
294 Endnotes




Chapter 6 Deficits and Dollars
1. Grabbe, O., “The Rise and Fall of Bretton Woods,” Chapter 1 in International Finan-
cial Markets, 3rd ed. (Englewood Cliffs, New Jersey: Prentice-Hall, 1996).
2. International inflation rates from the International Monetary Fund, country informa-
tion, www.imf.org.
3. Bresciani-Turroni, C., The Economics of Inflation; A Study of Currency Depreciation
in Post-War Germany (New York: A. M. Kelley, 1968).
4. Powell, J., A History of the Canadian Dollar (Ottawa: Bank of Canada, 1999).
5. The value of the Canadian dollar over time: Federal Reserve, www.federalreserve.
gov, see foreign exchange rates, historical data.
6. Statistics Canada, national income and expenditure accounts. Catalogue no. 13-001-
PPB, Fourth Quarter 2000.
7. Statistics Canada, www.statcan.ca.
8. The value of the Mexican peso over time: Federal Reserve, www.federalreserve.gov,
see foreign exchange rates, historical data.
9. Federal Reserve, dollar indexes, historical data, www.federalreserve.gov.
10. International Monetary Fund, www.imf.org.
11. “The End of the Affair?” The Economist (February 18, 2004).
12. Mr. Norfield and Ms. Foley are quoted in the same article: Litterick, D., “Euro Below
85 Cents after Duisenberg U-Turn Over Intervention,” telegraph.co.uk, October 17,
2000.
13. “Big Mac Index,” The Economist (May 27, 2004).

Chapter 7 Bonds
1. Mehra, R., and E.C. Prescott, “The Equity Premium: A Puzzle,” Journal of Monetary
Economics 15 (1985): 145“162.
2. Siegel, J.J., Stocks for the Long Run, 2nd ed. (New York: McGraw-Hill, 1998), and
related Table 8.1 in this book.
3. Tobin, J., “How to Think About the Deficit,” New York Review of Books 33, no. 14
(September, 25, 1986).
4. Presidential debate, Boston, MA October 3, 2000.
5. Federal Reserve Chairman Alan Greenspan™s prepared remarks at the Conference on
Bank Structure and Competition, sponsored by the Federal Reserve Bank of
Chicago, Chicago, Illinois, May 6, 2004.
6. Burnham, T.C., “Limits on Liability Actually Are What Invite the LBOs,” the Wall
Street Journal, February 1, 1989.
Endnotes 295



7. Orphanides, A., “Monetary Policy in Deflation: The Liquidity Trap in History and
Practice,” Federal Reserve Publication, 2003.
8. Investment Company Institute, www.ici.org, 2004 fact book, 122.


Chapter 8 Stocks
1. All data in this section from Siegel, J.J., Stocks for the Long Run, 2nd ed. (New York:
McGraw-Hill, 1998).
2. Dow Jones, www.djindexes.com.
3. Dimson, E., P. Marsh, et al., Triumph of the Optimists: 101 Years of Global Invest-
ment Returns (Princeton, NJ: Princeton University Press, 2002), 34“38.
4. Arnott, R. and P. Bernstein, “What Risk Premium Is ˜Normal™?” Financial Analysts
Journal 58 (2002): 64“85.
5. Hawking, S., A Brief History of Time, 10th anniversary edition (New York: Bantam,
1988), 129.
6. Ibid, 128.
7. Ibid, 129.
8. Chomsky, N., “Confronting the Empire,” Z Magazine 16, no. 3 (January 27, 2003).
9. Taleb, N.N., Fooled by Randomness: The Hidden Role of Chance in the Markets and
in Life (New York: Texere, 2001). Taleb, N.N., The Black Swan (New York: Random
House, 2005).
10. Galbraith, J.K., The Great Crash 1929 (New York: Houghton Mifflin, 1979).
11. The Wall Street Journal.
12. Microsoft conference call, July 22, 2004.
13. The Wall Street Journal.
14. The Wall Street Journal; see Table 3.1 of this book.
15. Dow Jones, www.djindexes.com.
16. “Bearish Merrill Strategist under Fire,” Cnnfn, November 22, 2003.
17. Leading Wall St. Firms™ Asset Allocation Recommendations (for 2004), Dow Jones
Newswires, December 31, 2003.
18. Federal Reserve, see Figures 6.3 and 6.4 of this book.
19. Siegel, J.J., Stocks for the Long Run, 3rd ed. (New York: McGraw-Hill, 2002), 361.


Chapter 9 Real Estate
1. The Japan Real Estate Institute, Urban Land Price Index (Nationwide), www.reinet.or.jp.
2. Ricardo, D., On the Principles of Political Economy and Taxation (London: John
Murray, 1817).
296 Endnotes



3. Mankiw, N.G., Principles of Economics, 2nd ed. (Fort Worth, TX: Harcourt College
Publishers, 2001).
4. Fallows, J., “The Passionless Presidency: The Trouble with Jimmy Carter™s Adminis-
tration,” The Atlantic Monthly (May 1979).
5. Office of Federal Housing Enterprise Oversight and Federal Reserve; see also Figure
7.1 of this book.
6. Mankiw, N.G., and D.N. Weil, “The Baby Boom, the Baby Bust, and the Housing
Market,” Regional Science and Urban Economics 19 (1989): 235“258.
7. S&P 500 (July 2004) 1101, Earnings estimate for S&P $61.50 for 2004 (Goldman,
Sachs & Co.).
8. Dow Jones, www.djindexes.com.
9. Krainer, J., “House Price Bubbles,” Federal Reserve Bank of San Francisco Eco-
nomic Letter (#2003-06), 2003.
10. MacKay, C., Memoirs of Extraordinary Popular Delusions (London: R. Bentley,
1841).
11. Marx, G., Groucho and Me (Classics of Modern American Humor Series). (New
York: AMS Press, 1991).
12. Securities and Exchange Commission, www.sec.gov.
13. Federal Reserve, Consumer Credit, www.federalreserve.gov.

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