Traditional finance has focused on developing the tools that investors use to optimize expected return and risk. Understanding the motivations behind this behavior is extremely important when applying these financial tools. This is the only textbook that describes (1) how investors actually behave, (2) the reasons and causes of that behavior, (3) why the behavior hurts their wealth, and (4) what they can do about it. New coverage includes: Behavioral finance is a rapidly expanding field. As such, new evidence of investor behavior has been added to every chapter. A new chapter describes how mood and feelings influence investor decisions. End-of-chapter questions are now included. These questions focus on the core concepts of each chapter.