News Release

NASD Foundation Funds Princeton Study to Explore How Bias Affects Investment Decisions

Washington, D.C.— The NASD Investor Education Foundation has awarded a $77,000 grant to Princeton University to conduct a two-year research project to analyze biases that impede smart investment decision-making. The study will be designed to promote more reasoned approaches to investing.

The study, Overcoming Psychological Biases to Promote Wise Investing, will focus on biases that prevent individuals from viewing their future financial needs realistically, from recognizing and guarding against illogical cultural and other influences that affect their judgments, and from taking the time necessary to make adequately informed decisions.  The goals of the study are to develop, test and disseminate information and strategies that will promote sound investor behavior.

"Making informed investment decisions can be a daunting task, even for sophisticated investors," said Robert R. Glauber, Chairman & CEO of NASD, who also serves as Chairman of the NASD Investor Education Foundation.  "Information alone cannot guarantee that the investor will make smart investment decisions. Personal experiences and biases matter too. This research will help investors understand how these factors shape investment decisions."

"Our ability to make wise investment decisions can be impaired by some common biases in human judgment," said Emily Pronin, the Principal Investigator of the grant and Assistant Professor of Psychology and Public Affairs at Princeton University.  "We are delighted to conduct this important research and suggest easily-employed interventions for mitigating these biases."

The NASD Investor Education Foundation, established in 2003, supports educational programs and research with the goal of providing investors with high-quality, easily accessible information and tools to better understand investing and the markets.  The Foundation recently awarded more than $1 million in total to 11 organizations, including Princeton University, for new educational programs and research projects targeting the underserved segments of the population.  The NASD Investor Education Foundation formally launched its second full grant cycle on April 5, inviting non-profit groups and researchers to apply for funding. Grant proposals must be submitted by June 3, 2005.  For details about grant programs and other new initiatives of the Foundation, visit

NASD is the leading private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation.  NASD believes that understanding should precede investing - and that education is often the best form of investor protection. NASD's broad range of investor education programs include Investor Alerts, brochures and online resource guides on such critical topics as mutual fund class shares and 401(k) and college savings plans. This information is distributed through its Web site,, printed materials and Investor Forums.