This past spring and summer, she published new research on the mutual-fund industry, and she's gearing up to release papers on theories tested in the real worlds of sports betting, publicly traded companies, pharmaceutical firms, and, once again, supermarket chains. Chevalier's insights into the mutual-fund industry made recent headlines in the financial press, which picked up on a June 1999 Journal of Finance paper by Chevalier and MIT's Glenn Ellison. That study was a small but provocative offshoot of a larger May 1999 Quarterly Journal of Economics paper, which began as a general inquiry into how workplace behavior is affected by certain implicit understandings between employers and employees. This suggested that younger managers would have a strong incentive to make less risky investment decisions, so Chevalier and Ellison investigated further and found that younger managers were indeed more risk-averse than their older counterparts, avoiding not only extremely bad, but also extremely good investment outcomes. In any job, there's a set of things that if you do, you'll get fired, and a set of things that if you do, you'll get promoted.
Most people know where that line is.
Chevalier has since traded the investment houses for a different kind of money-managing scene. Lately, she's been on the phone with the bookmaker at Las Vegas's Stardust casino for an October 1999 Journal of Business report. Football betting provided the economists with an analogous but more controlled setting. Looking at five years of data, Chevalier and Avery followed the change in point spreads in the week before a game. They found that the point spreads moved over the course of the week to favor teams on a hot streak.