Leaning for the Tape: Evidence of Gaming Behavior in Equity Mutual Funds

We present evidence that fund managers inflate quarter-end portfolio prices with last-minute purchases of stocks already held. The magnitude of price inflation ranges from 0.5 percent per year for large-cap funds to well over 2 percent for small-cap funds. We find that the cross section of inflation matches the cross section of incentives from the flow/performance relation, that a surge of trading in the quarter\u27s last minutes coincides with a surge in equity prices, and that the inflation is greatest for the stocks held by funds with the most incentive to inflate, controlling for the stocks\u27 size and performance

Mutual Fund Survivorship

This article provides a comprehensive study of survivorship issues using the mutual fund data of Carhart (1997). We demonstrate theoretically that when survival depends on multiperiod performance, the survivorship bias in average performance typically increases with the sample length. This is empirically relevant because evidence suggests a multiyear survival rule for U.S. mutual funds. In the data we find the annual bias increases from 0.07% for 1-year samples to 1% for samples longer than 15 years. We find that survivor conditioning weakens evidence of performance persistence. Finally, we explain how survivor conditioning affects the relation between performance and fund characteristics

Broadband Cortical Desynchronization Underlies the Human Psychedelic State

Psychedelic drugs produce profound changes in consciousness, but the underlying neurobiological mechanisms for this remain unclear. Spontaneous and induced oscillatory activity was recorded in healthy human participants with magnetoencephalography after intravenous infusion of psilocybin—prodrug of the nonselective serotonin 2A receptor agonist and classic psychedelic psilocin. Psilocybin reduced spontaneous cortical oscillatory power from 1 to 50 Hz in posterior association cortices, and from 8 to 100 Hz in frontal association cortices. Large decreases in oscillatory power were seen in areas of the default-mode network. Independent component analysis was used to identify a number of resting-state networks, and activity in these was similarly decreased after psilocybin. Psilocybin had no effect on low-level visually induced and motor-induced gamma-band oscillations, suggesting that some basic elements of oscillatory brain activity are relatively preserved during the psychedelic experience. Dynamic causal modeling revealed that posterior cingulate cortex desynchronization can be explained by increased excitability of deep-layer pyramidal neurons, which are known to be rich in 5-HT2A receptors. These findings suggest that the subjective effects of psychedelics result from a desynchronization of ongoing oscillatory rhythms in the cortex, likely triggered by 5-HT2A receptor-mediated excitation of deep pyramidal cells