Hedge fund manager Whitebox Advisors, Minneapolis, has awarded a $1.6 million grant for behavioral finance research to the International Center for Finance at the Yale School of Management, New Haven, Conn.
Whitebox was formed in 2000 by Andrew Redleaf, who received both his BA and MA from Yale University in 1978.
Top scholars leading the new program are: Robert J. Shiller, professor of economics at Yale Univeristy and author of "Irrational Exuberance," a book about the late 1990s tech-stock bubble; William N. Goetzmann, director of the international center and a well-known finance professor at the Yale School of Management; and Ravi Dhar, professor of marketing at Yale's business school.
"The real goal of this grant is to try and move Yale to the very forefront as a research center for behavioral finance," Mr. Goetzmann said. "The reason we need money is because behavioral finance is actually pretty costly." Doing experiments with people is more expensive than researching historic stock prices, he said.
The grant will finance several initiatives: launching an annual survey of recent homebuyers; expanding the business school's stock market confidence indexes to China and possibly India, the Middle East and Europe; other new research; and appointing Whitebox Advisors Visiting Scholars and Whitebox Advisors doctoral fellowships.
What the grant also shows is that behavioral finance is no longer a stepchild of the business school. "BF (Behavioral finance) is in the mainstream now, as conventional as a middle-aged man," quipped Meir Statman, chairman of Santa Clara University's finance department and a noted behavioral finance expert, in an e-mail.
