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David Hirshleifer is an American economist. He is a professor of finance and currently holds the Merage chair in Business Growth at the University of California at Irvine. As of 2018 he became President-Elect of the American Finance Association. In 2017, he was elected as Vice President of the American Finance Association (AFA) and assigned as Research Associate to National Bureau of Economic Research. He was previously a professor at the University of Michigan, The Ohio State University, and UCLA. His research is mostly related to behavioral finance and informational cascades. In 2007, he was on the Top 100 list of most cited economist by web of science's Most-Cited Scientists in Economics & Business.[1]

David Hirshleifer
NationalityUnited States
InstitutionPaul Merage School of Business at UC Irvine
FieldFinancial economics, Behavioral economics, including corporate finance, investments, and social influence
Alma materUniversity of Chicago
University of California, Los Angeles
Contributionsinformation cascades theory; theory of investor under- and over-reactions
AwardsSmith Breeden Award, 1999 for outstanding paper in the Journal of Finance
Information at IDEAS / RePEc


David is the son of Jack Hirshleifer, a deceased UCLA economics professor. He is married to Siew Hong Teoh, Dean's Professor of accounting at the University of California at Irvine. He served in editorial position for the Journal of Finance from 2003 to 2011. In addition, he also served as editor from 2001 to 2007 and executive editor from 2011 to 2014 for the Review of Financial Studies.


Hirshleifer's research areas include the modeling of social influence, theoretical and empirical asset pricing, and corporate finance. He is the originators of the theory of information cascades, and has modeled investor psychology and its effects on security market under- and over-reactions. His scholarly work on cascades has also received attention from popular economics, with references in both mainstream business and economics media.[2][3] He is a contributor to the fields of behavioral economics and behavioral finance.

Much of his work on investor psychology has focused on the effects of biased self-attribution, overconfidence, and limited attention. He and his co-authors were awarded the 1999 Smith Breeden Award for research showing how investor overconfidence, in combination with biased self-attribution, can explain the short-run momentum (finance) and long-run reversal patterns found the returns of many stock markets.[4] More recent work has shown how investor overconfidence may also help explain the forward premium puzzle in foreign exchange markets .[5] In his work on limited attention, he has shown that both distracting events[6] and lack of attention to relevant information[7] can help explain important accounting anomalies such as post earnings announcement drift

Hirshleifer's research has taken several approaches to show that stock returns are not exclusively based on relevant financial information, but also incorporate factors such as investors' mood and superstitions. His paper "Good Day Sunshine: Stock Returns and the Weather," found abnormally high returns in the New York Stock Exchange composite on days that it was abnormally sunny in the New York city area.[8][9] His research on the Chinese initial public offering market has provided evidence that Chinese companies which contain listing code numbers considered lucky in Chinese culture are initially priced much higher than financially similar Chinese firms debuting with unlucky numbers in their listing codes.[10]

In addition to investor psychology, Hirshleifer also examines behavior of different parties in financial market. His work with Usman Ali developed a method to identify insider tradings for a firm, which can be used to predict this firm's opportunistic behavior such as earnings management, restatements, SEC enforcement actions, shareholder litigation, and executive compensation.[11] This paper is later reported by Justin Lahart on Wall Street Journal.[12] His research, "Psychological Bias as a Driver of Financial Regulations", argued that regulator psychology plays an important role in financial markets.[13] This research has garnered attention as the 2007 financial crisis has led to greater a scrutiny about the process of setting financial regulation.[14]


Together with his father, Jack Hirshleifer, and the economist Amihai Glazer, Hirshleifer is the coauthor of the microeconomics textbook Price Theory and Applications: Decisions, Information, and Markets.

Selected publicationsEdit

  • Hirshleifer, Jack; Glazer, Amihai; Hirshleifer, David (2005). Price theory and applications: Decisions, markets, and information (7 ed.). Cambridge University Press. ISBN 9780521523424.
  • Bikhchandani, Sushil; Hirshleifer, David; Welch, Ivo (1992). "A Theory of Fads, Fashion, Custom, and Cultural Change as Informational cascades". Journal of Political Economy. 100 (5): 992–1026. CiteSeerX doi:10.1086/261849.
  • Daniel, Kent; Hirshleifer, David; Subrahmanyam, Avanidhar (1998). "Investor Psychology and Security Market Under- and Overreactions". Journal of Finance. 53 (6): 1839–1885. doi:10.1111/0022-1082.00077.
  • Hirshleifer, David (2001). "Investor psychology and asset pricing". Journal of Finance. 56 (4): 1533–1597. doi:10.1111/0022-1082.00379.
  • Bikhchandani, Sushil; Hirshleifer, David; Welch, Ivo (1998). "Learning from the behavior of others: Conformity, fads, and informational cascades". The Journal of Economic Perspectives. 12 (3): 151–170. doi:10.1257/jep.12.3.151.
  • Hirshleifer, David; Shumway, Tyler (2003). "Good day sunshine: Stock returns and the weather". Journal of Finance. 58 (3): 1009–1032. doi:10.1111/1540-6261.00556.


  1. ^ "Most-Cited Scientists in Economics & Business". Archived from the original on 2015-09-24.
  2. ^ "Real leaders do not swim with the shoal," Michael Skapinker, October 5, 2009
  3. ^ "How the Low-Fat, Low-Fact Cascade Just Keeps Rolling Along," John Tierney,, October 9, 2007
  4. ^ Daniel, K.; Hirshleifer, D.; Subrahmanyam, A. (1998). "Investor Psychology and Security Market Under- and Overreactions". Journal of Finance. 53 (6): 1839–1885. doi:10.1111/0022-1082.00077.
  5. ^ “Investor Overconfidence and the Forward Premium Puzzle,” Craig Burnside, Bing Han, David Hirshleifer and Tracy Yue Wang, forthcoming, Review of Economic Studies
  6. ^ “Driven to Distraction: Extraneous Events and Underreaction to Earnings News,” David Hirshleifer, Sonya Lim, and Siew Hong Teoh, Journal of Finance, 63(5), October (2009):2287-2323 Hirshleifer, D.; Lim, S. S.; Teoh, S. H. (2009). "Driven to Distraction: Extraneous Events and Underreaction to Earnings News". The Journal of Finance. 64 (5): 2289. CiteSeerX doi:10.1111/j.1540-6261.2009.01501.x.
  7. ^ “Limited Attention, Information Disclosure, and Financial Reporting, David Hirshleifer and Siew Hong Teoh, Journal of Accounting and Economics, 36(1–3), December, (2003), 337–386.Hirshleifer, D.; Teoh, S. H. (2003). "Limited attention, information disclosure, and financial reporting". Journal of Accounting and Economics. 36 (1–3): 337–386. CiteSeerX doi:10.1016/j.jacceco.2003.10.002.
  8. ^ "Good Day Sunshine: Stock Returns and the Weather," David Hirshleifer and Tyler Shumway, Journal of Finance, 58(3), June, (2003):1009–1032.
  9. ^ This work is also referenced in the Forbes Magazine article "Blinded by the Light: Sunshine and stocks," by Brett Nelson, July 21, 2003
  10. ^ "Nanyang Business School media coverage" (PDF). Archived from the original (PDF) on 2011-10-07. Retrieved 2011-02-28.
  11. ^ Ali, Usman; Hirshleifer, David (2017). "Opportunism as a Managerial Trait: Predicting Insider Trading Profits and Misconduct" (PDF). Journal of Financial Economics. Forthcoming (3): 490–515. doi:10.1016/j.jfineco.2017.09.002.
  12. ^ Lahart, Justin (2015). "Investors Should Beware When Good Managers Make Great Traders". Wall Street Journal.
  13. ^ “Psychological Bias as a Driver of Financial Regulation,” European Financial Management, November 2008, 14(5) pp. 856–874. Hirshleifer, David (2008). "Psychological Bias as a Driver of Financial Regulation". European Financial Management. 14 (5): 856–874. CiteSeerX doi:10.1111/j.1468-036X.2007.00437.x.
  14. ^ "Does Financial Regulation Protect Investors?" John Nofsinger, September 5, 2008,

External linksEdit

  • [1] David Hirshleifer's website.