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The basic ostrich effect again predicts a negative coefficient on the down Dow dummy variables. An extended version of the ostrich effect also predicts positive coefficients on the lagged returns, to the extent that larger positive negative returns induce even more less attention. The results for specification 4 again confirm the existence of the basic ostrich effect based on the sign of returns i. e. , the coefficients on the down Dow dummy variables are all negative and statistically significant but indicate a nonmonotone relationship between attention and the magnitude of lagged returns. In particular, the negative coefficients on negative returns mean that the basic ostrich effect can be overwhelmed by a demand for information after sufficiently large negative returns.

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