Tversky and Kahneman (1986) argue that, due to framing and prospect
theory, the rational theory of choice does not provide an adequate foundation
for a descriptive theory of decision making.
Yaari (1987) proposes a modication to expected utility theory and obtains a
so-called `dual theory' of choice under risk. De Bondt and Thaler (1987) report
additional evidence that supports the overreaction hypothesis.
Samuelson and Zeckhauser (1988) perform a series of decision-making experiments
and nd evidence of status quo bias. Poterba and Summers (1988)
investigate transitory components in stock prices and found positive autocorrelation in returns over short horizons and negative autocorrelation over longer
horizons, although random-walk price behaviour cannot be rejected at conventional
statistical levels.