This paper studies to what extent the experiences of households shape their willingness to take financial risks. It follows the methodology of Malmendier and Nagel (2011) and applies it to a novel data set on household finances covering euro area households. We show that experienced stock market...

This survey discusses behavioral and experimental macroeconomics emphasizing a complex systems perspective. The economy consists of boundedly rational heterogeneous agents who do not fully understand their complex environment and use simple decision heuristics. Central to our survey is the...

When people share risk in financial markets, intermediaries provide costly enforcement for most trades and, hence, are an integral part of financial markets’ organization. We assess the degree of risk sharing that can be achieved through financial markets when enforcement is based on the...