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Overall, 72 subjects invest their endowment in four risky assets. Each com-bination of assets yields the same expected return and variance of returns. Illusion of expertise prevails when one prefers nevertheless the self-selected portfolio. After being randomly assigned to groups of four...
Persistent link: https://www.econbiz.de/10005013059
how to design optimal compulsion. One argument is that the amount of compulsion should rise with the size of the bias to … the bias, the amount of compulsion should not depend on the bias. This puzzle is solved for the case where individuals are … affected by a bias that leads them to under-save, acknowledging that the planner predicts each individual’s optimal action with …
Persistent link: https://www.econbiz.de/10008833875
subjective beliefs on the distribution of returns. However, the bias of these endogenous subjective beliefs induces the choice of …
Persistent link: https://www.econbiz.de/10005406370
We study the effects of overconfidence in a two-period investment-decision agency setting. Under common priors, agent … from first-period investment. This implies that agent overconfidence mitigates the agency problems arising from the agent …
Persistent link: https://www.econbiz.de/10005406373
Recent field evidence suggests a positive link between overconfidence and innovative activities. In this paper we argue … that the connection between overconfidence and innovation is more complex than the previous literature suggests. In … particular, we show theoretically and experimentally that different forms of overconfidence may have opposing effects on …
Persistent link: https://www.econbiz.de/10010877694
salient perturbations, we propose a strategic foundation of overconfidence. Since overconfident statements are used in …
Persistent link: https://www.econbiz.de/10010877986
Contributing to the literature on the consequences of behavioral biases for market outcomes and institutional design, we contrast producer liability and minimum quality standard regulation as alternative means of social control of product-related torts when consumers are heterogeneously...
Persistent link: https://www.econbiz.de/10010948857
If countries anticipate Bertrand competition in tax rates, they may expend effort that makes some of their tax payers less mobile or increases the mobility of tax payers elsewhere. I provide piecemeal evidence on what activities countries use. I analyse how such activities interact with Bertrand...
Persistent link: https://www.econbiz.de/10005406068
We explore the impact of mortgage securitization on the international diversification of macroeconomic risk. By making mortgage-related risks internationally tradeable, securitization contributes considerably to better international consumption risk sharing: we find that countries with the most...
Persistent link: https://www.econbiz.de/10005406369
bias or border effect rather than by using other indicators such as the openness rate or the existence of tariffs and non …
Persistent link: https://www.econbiz.de/10010790167