Showing 1 - 10 of 102
In this paper, we apply the bounded rationality approach to an investment situation. In a simple setting where an investor decides between a riskless bond and a risky asset, we distinguish three aspiration levels: a lowest threshold which one wants to guarantee, the aspiration level given by...
Persistent link: https://www.econbiz.de/10005824109
Overall, 72 subjects invest their endowment in four risky assets. Each combination 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 subjects...
Persistent link: https://www.econbiz.de/10005765210
In this paperwe relate individual risk attitude as elicited by binary lotteries and certainty equivalents to market behavior. By analyzing 26 independent markets with a total of 280 participants we show that binary lottery choices and certainty equivalents are pootly correlated. Only lottery...
Persistent link: https://www.econbiz.de/10005765157
An empirically well-established finding is that equity portfolios are concentrated in the domestic equity market of the investor. Previous theoretical and empirical analyses have mainly focused on institutional explanations and largely neglected individual behavior. In this study we report the...
Persistent link: https://www.econbiz.de/10005588024
This experimental study investigates whether individuals prefer bounded rationality over rational choice theory when facing simple investment tasks. First, participants state some personal parameters that serve as an input to render a theoretical approach, namely satisficing or optimality,...
Persistent link: https://www.econbiz.de/10005252199
Persistent link: https://www.econbiz.de/10005765167
The paper explores the applicability of bounded rationality theory. In particular, we investigate whether basic principles of aspiration formation and satisficing behavior are transferable between similar situations. Individuals are sequentially confronted with two risky investment tasks, a...
Persistent link: https://www.econbiz.de/10005765201
We experimentally investigate whether individuals can reliably detect cooperators in an anonymous decision environment by allowing participants to condition their choices in an asymmetric prisoner's dilemma and a trust game (i) on their partner's donation share to a self-selected charity, and...
Persistent link: https://www.econbiz.de/10005247883
We experimentally test overconfidence in investment decisions by offering partic- ipants the possibility to substitute their own for alternative investment choices. Overall, 149 subjects participated in two experiments, one with just one risky as- set, the other with two risky assets....
Persistent link: https://www.econbiz.de/10005765098
In this paper we report an experimental study of the ultimatum game in which subjects bargain for constant and slowly decreasing pies, over 3 and 11 rounds with either constant or alternating offers. With decreasing pies efficiency requires early agreements, whereas constant pies allow for late...
Persistent link: https://www.econbiz.de/10005588001