Publications

I discuss some ways in which ideas from psychology may be helpful for thinking about the financial crisis of 2007-2008. I focus on three aspects of the crisis: the surge in house prices in the years leading up to 2006; the large positions in subprime-linked securities that many banks had accumulated by 2007; and the dramatic decline in value of many risky asset classes during the crisis period. I review a number of psychology-based mechanisms, but emphasize two, both of which have already been extensively studied in behavioral finance and behavioral economics: over-extrapolation of past price changes; and belief manipulation.

We conducted a meta-analysis of randomized, placebo-controlled trials to determine the efficacy of antipsychotic and alpha-2 agonists in the treatment of chronic tic disorders and examine moderators of treatment effect. Meta-analysis demonstrated a significant benefit of antipsychotics compared to placebo (standardized mean difference (SMD)= 0.58 (95% confidence interval (CI): 0.36–0.80). Stratified subgroup analysis found no significant difference in the efficacy of the 4 antipsychotic agents tested (risperidone, pimozide, haloperidol and ziprasidone). Meta-analysis also demonstrated a benefit of alpha-2 agonists compared to placebo (SMD = 0.31 (95% confidence interval CI: 0.15–0.48). Stratified subgroup analysis and meta-regression demonstrated a significant moderating effect of co-occurring ADHD. Trials which enrolled subjects with tics and ADHD demonstrated a medium-to-large effect (SMD=0.68 (95%CI: 0.36–1.01) whereas trials that excluded subjects with ADHD demonstrated a small, non-significant benefit (SMD=0.15 (95%CI: −0.06–0.36). Our findings demonstrated significant benefit of both antipsychotics and alpha-2 agonists in treating tics but suggest alpha-2 agonists may have minimal benefit in tic patients without ADHD.