The well-known tendency of investors to favor cash dividends emerges quite naturally in two new theories of choice behavior [the theory of self-control due to Thaler and Shefrin (1981), and the version of prospect theory set out by Kahneman and Tversky (1979)]. Although our treatment is novel when viewed from the perspective of standard financial theory, it provides explanations for a phenomenon that has long been described as perplexing.

Frank Milne, Hersh M. Shefrin; Clarifying Some Misconceptions About Stock Market Economies*, The Quarterly Journal of Economics, Volume 99, Issue 3, 1 Augu