Presented is the formulation for determining the exact, expected growth-optimal fraction of equity to risk for all conditions, rather than merely the asymptotic growth-optimal fraction. The formulation presented represents the surface in the leverage space manifold, wherein the loci at the peak...

We report the results of two laboratory experiments that study how university student and staff participants chose retirement savings investment options using ‘user-friendly' information prescribed by regulators. We demonstrate that choices of more than 20% of participants cannot be predicted...

Neoclassical finance assumes that investors are Bayesian. In many realistic situations, Bayesian learning is challenging. Here, we consider investment opportunities that change randomly, while payoffs are observable only when invested. In a stylized version of the task, we wondered whether...

Until recently we have known little about how core decision processes change with age and how aging may impact the structure and function of corresponding ventromedial frontostriatal neural systems (Samanez-Larkin & Knutson, 2014). The chapter begins by briefly orienting the reader to...

As the global population ages, older decision makers will be required to take greater responsibility for their own physical, psychological and financial well-being. With this in mind, researchers have begun to examine the effects of ageing on decision making and associated neural circuits. A new...

The underlying physiological mechanisms of biases are not well understood. As such, we examine the impact of testosterone and cortisol levels on several commonplace investment biases using realistic trading simulations. Cortisol, the biological marker of stress, is positively related to the...

We analyze the impact of individuals' degree of extraversion and neuroticism on their decision making in an experimental asset market. To establish this link between research on experimental asset markets and social psychology we use a unique approach that combines a questionnaire designed to...

We experimentally study how presentation formats for return distributions affect investors' diversification choices. We find that sampling returns alleviates correlation neglect and constitutes an effective way to improve financial decisions. When participants get a description of probabilities...

People often expose themselves to negative tail risk by taking on losing bets in which randomly-occurring major losses eradicate all previous gains. Why is this? Here I present evidence from a collection of laboratory experiments aimed at testing several plausible causal explanations.The...

We study the impact of colors of paintings on prices in the art auction market and incorporate color attributes of non-figurative paintings in pricing models. A one standard deviation increase in the percentages of blue (red) hue leads to premiums of 10.63% (4.20%). We also conduct laboratory...