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Investor behavior was shown to be considerably different when the risk-return tradeoff is presented by experience sampling as opposed to a descriptive communication. We analyze the persistency of this difference in a setting in which investors are faced with multiple decisions over time and are...
Persistent link: https://www.econbiz.de/10011870656
We show that preferred investment styles can be determined by the big five personality traits. Using this result, we build a tool that recommends investment styles. The resulting recommendations are significantly higher rated than random recommendations.We collected detailed personality traits...
Persistent link: https://www.econbiz.de/10013168886
Estimates of agents' risk aversion differ between market studies and experimental studies. We demonstrate that the estimates can be reconciled through consistent treatment of agents' tendency for narrow framing, regarding integration of background wealth as well as across risky outcomes: Risk...
Persistent link: https://www.econbiz.de/10009295788
This paper introduces and analyzes an evolutionary model of a financial market with a risk-free asset. Focus is on the study of local stability of the wealth dynamics through the application of recent results on the linearization and stability of random dynamical systems (Evstigneev, Pirogov and...
Persistent link: https://www.econbiz.de/10008797770
Institutional investors in equities tend to follow well-defined investment strategies, often based on factors such as size, value, momentum, quality, dividend yield and other stock characteristics. This paper explores the impact of capital flows between investment strategies on the cross-section...
Persistent link: https://www.econbiz.de/10012800936
This note illustrates a simple but important insight for financial investment. In a heterogeneous agent-based evolutionary finance market model with long-lived assets, markets are stable if clients of fundamental ('value') investment funds are more patient than clients of other funds
Persistent link: https://www.econbiz.de/10011899600
Persistent link: https://www.econbiz.de/10012162241
We apply a new and innovative approach to communicating risks associated with financial products that should support investors in making better investment decisions. In our experiments, participants are able to gain “simulated experience” by random sampling of a previously described return...
Persistent link: https://www.econbiz.de/10013065022
We consider a simple CAPM with heterogenous expectations on assets' mean returns and homogenous expectations on the covariance of returns. In this model alpha-opportunities naturally arise in a financial market equilibrium. We show that that the hunt for alpha-opportunities is a zero-sum game...
Persistent link: https://www.econbiz.de/10012730699
Tobin (1958) has argued that in the face of potential capital losses on bonds it is reasonable to hold cash as a means to transfer wealth over time. It is shown that this assertion cannot be sustained taking into account the evolution of wealth of cash holders versus non cash holders. Cash...
Persistent link: https://www.econbiz.de/10014032025