Credit default swaps (CDS) played an important role in the financial crisis of 2008. While CDS can be used to hedge risks, they can also be used for speculative purposes (as occurred during the financial crisis) and regulations have been proposed to limit such speculative use. Here, we provide...

We study the role of experience in the formation of asset price bubbles. Therefore, we conduct two related experiments. One is a call market experiment in which participants trade assets with each other. The other is a learning-to-forecast experiment in which participants only forecast future...

Cross-country differences in homeownership rates are large and persistent over time, with homeownership rates ranging from 44% in Switzerland to 83% in Spain. This paper investigates whether cultures-defined as behavioral attitudes passed across generations-may value homeownership differently,...

A large fraction of households have very little savings buffer and are there-fore vulnerable to financial shocks. We examine whether a social norm nudgecan stimulate such households to save more by running a small-scale survey ex-periment and a large-scale field experiment at a retail bank in...

In studies of bank runs the initial deposit decision is typically not taken into account. However, it is unlikely that people will entrust money to a bank that they expect to fail in the near future. The aim of this study is to investigate to what extent this mechanism prevents bank runs. It...

We develop a general framework for measuring biases in expectation formation. The method is based on the insight that biases can be inferred from the response of forecast errors to past news. Empirically, biases are measured by flexibly estimating the impulse response function of forecast...

Analyzing over 15 years of account-level trading records from Finland, we show that option features-expiration, moneyness, and the strike price-influence the behavior of retail investors and exacerbate their behavioral biases. Retail investors selectively exploit the expiration feature of...

We investigate learning in a repeated bank choice game, where agents first choose a bank to deposit in and then decide to withdraw that deposit or not. This game has a single Nash equilibrium in pure strategies, characterized by all agents depositing in the bank that offers the highest return,...

When analysing the volatility related to high frequency financial data, mostly non-parametric approaches based on realised or bipower variation are applied. This article instead starts from a continuous time diffusion model and derives a parametric analog at high frequency for it, allowing...

The equity premium is a key parameter in asset allocation policies. There is a vigorous debate in the literature regarding the actual measurement of the equity premium, its size and the determinants of its variation. This study aims to take stock of this literature by means of a meta-analysis....