This experimental study investigates whether individuals preferbounded rationality over rational choice theory when facing simpleinvestment tasks. First, participants state some personal parametersthat serve as an input to render a theoretical approach, namelysatisficing or optimality,...

The paper explores the applicability of the satisficing approach. Inparticular, we investigate whether basic principles of aspiration formationand satisficing behavior are transferable between similar situations.Individuals are sequentially confronted with two risky investmenttasks, a simple and...

We examine in an experiment the causes, consequences and possible cures ofmyopic loss aversion (MLA) for investment behaviour under risk. We find thatboth, investment horizons and feedback frequency contribute almost equally tothe effects of MLA. Longer investment horizons and less frequent...

This paper investigates factors influencing individual portfolio allocations withparticular focus on the role of illusion of control. By forming their portfolio of tworisky lotteries and one risk-less alternative, subjects are requested to reach a targetinvestment profit, whereby equal...

Myopic loss aversion (MLA) has been established as one prominentexplanation for the equity premium puzzle. In this paper we address two issuesrelated to the effects of MLA on risky investment decisions. First, we assess therelative impact of feedback frequency and investment flexibility (via...

In this paper we investigate the effects of local interaction in a CPR-like environment.We employ a local interaction model where subjects are allocated alonga circle and only interact with their most direct neighbors. In traditional socialdilemma experiments, the return of one’s actions is...

Dynamics of compliance, depending on audit probability, sanctions, and the time lagbetween audits, are investigated in a tax experiment. Compliance varied significantlyover time: it decreased immediately after an audit and increased afterwards, especially if audits were frequent and sanctions high.

This paper studies the effect of introducing costly partner selection for the voluntarycontribution to a public good. Subjects participate in six sequences offive rounds of a two-person public good game in partner design. At the end ofeach sequence, subjects can select a new partner out of six...

An empirically well-established finding is that equity portfolios are concentratedin the domestic equity market of the investor. Previous theoreticaland empirical analyses have mainly focused on institutional explanations andlargely neglected individual behavior. In this study we report the...