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University of Cincinnati College of Law University of Cincinnati College of Law Scholarship and Publications Faculty Articles and Other Publications Faculty Scholarship 2013 Behavioral Economics and Investor Protection: Reasonable Investors, Efficient Markets Barbara Black University of C incinnati College of L aw, barbara.black@ Follow this and a itional works at : /fac_pubs Part of the Banking and Finance Commons, and the Securities Law Commons Recommended Citation Black, Barbara, Behavioral Economics and Investor Protection: Reasonable Investors, Efficient Markets (2013). Faculty Ar ticles and Other Publications. Paper 209. /fac_pubs/209 This Article is brought to you for free and open access by the Faculty Scholarship at University of Cincinnati College of Law Scholarship an Publications. It has been accepted for inclusion in Faculty Articles and Other Publications by an authorized administrator of University of Cincinnati College of Law Scholarship and Publications. For more information, please contact ken.hirsh@. ESSAY Behavioral Economics and Investor Protection: Reasonable Investors, Efficient Markets BarbaraBlack* [M]y questions about the stock market have hardened into a larger puzzle: a major industry appears to be built largely on an illusion of skill.l - Daniel Kahneman The judicial view of a reasonable investor plays an important role in federal securities regulation. Courts express great confidence in the reasonable investors cognitive abilities, a view not shared by behavioral economists. Similarly, the efficient market hypothesis has exerted a powerful influence in securities regulation, although empirical evidence cal