An individual’s personal experiences meaningfully influence their beliefs and attitudes about the world. While this claim is fairly intuitive and well-supported by evidence in the psychology literature, many researchers suggest that theories of rational decision-making and Bayesian belief updating do not account for it.

The two papers highlighted below contribute helpful insights into how investors’ beliefs are shaped by past experiences. In the first paper, published in 2011 and cited nearly 2,000 times since, the researchers explore the popula...