Panic

Due to its length, this article is in a separate page of this "PQ" section of the Glossary

Par - Pb	Dates of related message(s) in the Behavioral-Finance group (*): Year/month, d: developed / discussed, i: incidental
Paradigm	Due to its length, this article is in a separate page of this "PQ" section of the Glossary
(decision) Paradoxes	See microeconomics paradoxes, game theory + probabilities link
Paralysis	See hysteresis, delaying tactics, status quo bias

Passive investing / management

Due to its length, this article is in a separate page of this "PQ" section of the Glossary

PBR (P/B) effect

See PER effect, size effect

Jewels in the books? Definition: The PBR or P/B of a stock is an acronym or its price to book ratio. PBR = Market Price / net assets per share. In other words it measures how much the market pays for those corporate assets (less the corporate debts) compared to their book value. The PBR "effect" When prices climb on the book. Although it is not the main criterion, the book value seems to play a part in stock prices. It can make them rise above the value calculations that take only into account earnings or dividend prospects. As if investors were interested not only in the business future, but also in the treasures in the company's vault. This does not fit the standard theory. Investing on the basis of the P/B goes against the "efficient" evaluation paradigm that assumes that prices just depend of future returns and risks. It is therefore called an "effect", an understatement for "price or return anomaly". The PBR effect is usually listed in the same category of "anomalous" pricing parameters than the "PER (P/E) effect" or the "size effect". Is this effect rational? Obsessed by the treasure chest? We saw above that investing on the basis of the P/B goes against the "efficient" evaluation paradigm. But the P/B effect is not completely irrational if we use a broader view. It is in some cases justified by taking into account that: A firm with plenty of marketable assets can recover money in case of problem by selling some of them ("family jewels"). Takeover bids, that would boost the stock price, can be motivated by the value of those salable assets. Sometimes the true value can lie in "hidden jewels" not accounted for in the books.

Pe - Per	Dates of related message(s) in the Behavioral-Finance group (*): Year/month, d: developed / discussed, i: incidental
Peer influence / pressure / conformity / fear	Due to its length, this article is in a separate page of the "P-Q" section of this Glossary
P/E (PER) effect	Due to its length, this article is in a separate page of the "P-Q" section of this Glossary

Perceived risk, risk perception	Due to its length, this article is in a separate page of the "PQ" section of the Glossary
Perception	Due to its length, this article is in a separate page of the "PQ" section of the Glossary
Percolate, Percolating, percolation threshold	Due to its length, this article is in a separate page of the "P-Q" section of this Glossary

Persistence (in fractals / trends / biases / volatility)

00/6d - 01/3i,8i,10i,11i - 03/10i + see Hurst coefficient, Lyapunov exponent, trend, diffusion, percolation, longshot bias, long memory

Still going strong? Usually (see diffusion, percolation) any dynamic phenomenon (growth or decline for example): Has a good chance to persist, or even to snowball, once it goes above a critical point / threshold (for example a number of buyers for a new product). But, if it stays for too long under that point, it is not certain to persist. It can even abort and disappear completely (anti-persistence, negative persistence). The Hurst coefficient helps to measure persistence in a series of historical data. Trend persistence in asset markets As concern stock market trends, they can, after a given period (for example over 1 year), be considered as having "settled in". In other words a long established trend seems to have a higher probability  in the next period, to persist than to revert. The delayed reversion will happen only when it reaches the next critical point. Between take off and landing, market trends are often on autopilot. Also, usually, upwards trends seem to persist longer than downward trends.

(money, investment) Personality

03/9d + see psychology, style, profiling + eprofile

Know thyself! Various works (psychographic) by psychologists have tried to classify money personalities / styles according to various behavioral traits, such as Their preference between spending and saving, often linked to their time horizon (see that phrase), Their risk profile (degree of aversion to risk), Their ethical preferences, Etc. (see "style" for more details). To detect those traits could help: In individual behavior counseling, including financial strategy counseling. Or to self-analyze and understand one's own goals and practices. As marketing segmentation tools for banks and money managing firms To understand better the effects of the various classes of investors on financial markets, in order for example to build "agent-based" (see that phrase) investment models.

Perverse effect, incentive

Due to its length, this article is in a separate page of the "P-Q" section of this Glossary

Pes - Pri	Dates of related message(s) in the Behavioral-Finance group (*): Year/month, d: developed / discussed, i: incidental
Peso problem anomaly	00/8i + see rare events + probabilities
The peso problem refers to a market anomaly, for example a sudden price fall, that is infrequent (rare event, fat tails, extreme occurrence) but that leads to extreme consequences that can be disastrous.
Pessimism	see emotion, greed & fear, optimism
Pessimism (gloom) can have rational basis (perceived risk) but can be emotionally linked to fear.

Phase transition	04/1i + see percolation
(market) Play, Player, Playing	See game playing, game theory, agent-based model,
Pleasure (and pain)	See pain and pleasure

Ponzi scheme	See pyramidal scheme
(market) Positioning	See profile
Power law	03/4i + see distribution
Precision bias	See range estimate aversion

(economic) Preferences interactions, reversal, (in)transitivity	Due to its length, this article is in a separate page of the "P-Q" section of this Glossary
(equity, risk) Premium	See risk premium
(psychological) Pressure	See conformity, peer influence, groupthink, herding, mania, hysteria

(bid, psychological) Price (fair) Price Price anomaly Price information (Asset) pricing	Due to their lengths, those articles are in a separate page of the "P-Q" section of this Glossary
Price-earnings ratio, price to book ratio	See P/E effect, P/B effect

Pride

See self esteem, commitment, rationalization, attribution, status quo bias, narcissism

Too proud to think. Too proud to change. Pride is not a bias in itself. It can lead to impressive feats. But it becomes a bias when it leads to a primacy of the ego, which overrides a sound appreciation of situations. It is one of the main causes of stubbornness, that consists for example, in corporate management or in investment, to maintain blindly a losing strategy (see loss aversion). Many investors stick stubbornly to their initial decisions and commitments (see that word), and usually try to find rational reasons and attributions to justify this, even if new facts and events show them they are mistaken, as their ego cannot stand the pain to be wrong. Pride accelerators Extreme forms of pride happen when that feeling is combined: With overconfidence, arrogance and presumption and it becomes hubris and narcissism, Or with an inferiority complex, It translates into a form of frustration or envy that makes the person try to take inconsiderate risk or create huge damage, just to prove to itself or to others that it is not an underling. Those cases seem to be frequent among "power people", which can explain strange decisions by business and political leaders. It seems for example to be one of the motivation behind many mergers and acquisitions, which can explain why a good proportion of them are counterproductive.

Primacy / priming effect	See anchoring, (availability) heuristic
Remember it, my boy, you will not give again a good first impression. The primacy / priming effect relates to the first idea, fact, perception or representation that comes to mind about an issue, an event or an information. It can instantly and unconsciously become a cognitive or affective anchor that excludes other references when dealing with the issue It is a form of availability heuristic (see heuristic)
Principal- agent theory	02/,8i ,11i + see agent, ethical, perverse incentive, moral hazard

Pro	Dates of related message(s) in the Behavioral-Finance group (*): Year/month, d: developed / discussed, i: incidental
Probability / Probabilities (objective, subjective, conditional)	Due to its length, this article is in a separate page of the "P-Q" section of this Glossary
Procrastination	See status quo bias, delaying tactic, underreaction
Profile / Profiling 1 (stock types) Profile / Profiling 2 (investors types)	Due to their lengths, those article are in a separate page of the "P-Q" section of this Glossary

Projection bias

See attribution

Their eyes are not my eyes Definition: In psychology, the projection bias, something related to the attribution bias, is the illusion we might have that other people think - and thus will act or react - the same way than we do. It is also called the false consensus bias, the idea that everybody see things like we do. This self-centered bias consists also in attributing to others our own motivations, including ...our unconscious biases. In that respect, beware of some biased advisers and sellers! Instead of understanding your real needs and motivations, and to analyze rationally what could fit your true interest, they tend to attribute to you their own preferences and try to orientate your decisions accordingly.

Propaganda	00/12i + see disinformation, manipulation
Prospect theory	Due to its length, this article is in a separate page> of the "P-Q" section of this Glossary
See also the general "aversion" article to see the relations between risk aversion, prospect theory, loss aversion, regret aversion, disposition effect...

Prototype	See profiling, type
A prototype is an elaborate example of a given category (of stocks, of investors, for example...) that is still in the making and could gain importance in the future. Prototype is often used to describe a new man made phenomenon or design while archetype refers to old examples, real or invented. Both are found in finance: old categorizations as well as new paradigms. The risk is to go from archetype and prototype to stereotype (abusive categorization): see that word.
Proximity bias	See home bias

Ps - Py	Dates of related message(s) in the Behavioral-Finance group (*): Year/month, d: developed / discussed, i: incidental
Pseudo-certainty, pseudo-instinct	See belief, automaticity
This is a psychological certainty that is not based on a conscious rational approach, It can be a brilliant intuition, a smart subconscious neural analysis, but it has also some chance of being an illusion (see that word).

Psychology (of investing, markets, money...) (economic, financial) Psychology	Due to its length, this article is in a separate page of the "P-Q" section of this Glossary
Psychosociology / Psycho-sociology	See social psychology

Public behavioral finance / economics	See behavioral public economics / finance, public choice, agent-principal
Public choice / public policy bias	04/9i - 05/1i + see incentives, behavioral public economics / finance, agent-principal, social mood
Caveat voters! Public choice encompasses decisions made either by voters or in the name of voters (= by public administrations), specifically in economic matters. Those collective decisions are often proposed or considered as an antidote to some misallocations due to market anomalies. But those corrections or "voluntary" reorientations have their own biases. They can create their own direct anomalies, hurdles and failures and/or bring indirect disincentives (see perverse effects). One trait is the "majority cycle" (or voter pendulum). It can bring extreme effects in one direction or the other, causing legal and social instabilities, something akin to excessive volatility. Of course, political coalitions that try to represent a larger share of the population than just one side or the other, can be instable also, but become necessary when everything else failed. Another aspect is optimistic / pessimistic "waves" in social mood. We can label "behavioral public choice" the subfield of behavioral economics dealing with those phenomena. Even if public schemes have their deficiencies, some BE/BF specialists propose "libertarian paternalism" to avoid biases in financial decisions when totally left to the individuals, for example about investing for retirement..

Pump and dump

03/7i + 06i + see deception, manipulation, ethics

Village pump, that takes more water than it gives. Pump and dump is a form of manipulation of information about a stock (or another traded asset). The manipulators create a spin (pump) around the stock (often a "penny stock") of a company which usually is a dead horse and in which they have or took a vested interest. Then they sell them (dump) at a good price, thanks to the buying frenzy due to the hype. That scam might be launched via traditional media, via newsletters, via internet spam, via advisers, via word of mouth (see viral communication)... Also, a first buy for the pumper, by which it stuffs its bag with some assets, to create the impression that an upward momentum has started. and which it will sell then to take its profit. It might also take place through recommendations from a sell-side analysts whose bank has at the same times corporate financing activities for the company that issued the stock. In other words, in that last case, the celebrated "China wall" between both activities has a hole.

Pyramidal scheme

See greater fool delusion, deception

Suckers at ground level, crooks at the top. A pyramidal scheme / Ponzi's scheme is a scam that creates a "make big money fast" belief and is built as an intentional bubble-like phenomenon. It uses the mechanics of baiting an ever increasing number of new entrants into subscribing or buying a financial asset, with the promise of spectacular incomes or gains. Actually, a portion of the fresh money they bring will pay the revenues and withdrawal of the previous "investors", and the remaining cash is siphoned into the scammers' pockets. It gives the illusion of working beautifully, making a lot of money for the investors ... until the scheme collapse when there are no more enough new sheep to flee. All those who get stuck in the trap lose the money they put in the hands of the scammers. The recently discovered "Madoff scheme", which apparently drowned 60 billion US dollars and persisted for 17 years, have broken all records in the category. But smaller and more local ones are getting born regularly like daisies in the meadow in springtime.

Q	Dates of related message(s) in the Behavioral-Finance group (*): Year/month, d: developed / discussed, i: incidental
QA	See quantitative analysis
Quality premium	04/4i

Quant Quant fund Quantitative analysis / QA Quantitative behavioral finance Quantitative investment Quantum lump, jump

Due to thelengths, those articles are in a separate page of the "P-Q" section of this Glossary

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