Essays in Behavioral Finance.

Summary This thesis consists of three separate chapters. In the first chapter, I test the hypothesis that the display format of financial information affects the decisions of individual investors. I show that a more efficient display allows individuals to better manage their limit orders by minimizing the adverse selection risk incurred by using these orders. This suggests that individual investors have bounded rationality. In the second chapter, I test whether liquidity-providing trading strategies can generate profits, after transaction costs, for the active traders who implement them. I show that only individuals in the highest performance decile can persistently beat the market using highly contrarian strategies that require the massive use of limit orders. Limit-to-arbitrage seems to explain this phenomenon. In the third chapter, I study individuals' strategies around earnings announcements. I show that round-trips that are implemented one day before an announcement generate on average higher profits and are shorter in duration than those implemented in normal times. Individuals close their winning positions on the day of the announcement, which may slow down the price adjustment following the announcement.