Recent experimental research suggests that decision makers tend to overweight rare events when responding to a description of the possible outcomes, but tend to underweight low probability events in decisions from experience. The current paper examines whether in an experiential setting...

One of the robust regularities of stock markets is the asymmetric relation between stock returns and their subsequent volatility, commonly referred to as the 'leverage effect'. In the current paper we present a psychological model linking between gains and losses, choice volatility, and market...