In this paper the authors experimentally test overconfidence in investment decisions by ordering participants the possibility to substitute their own for alternative investment choices.

We experimentally test overconfidence in investment decisions by offering participants the possibility to substitute their own for alternative investment choices.Overall, 149 subjects participated in two experiments, one with just one risky asset, the other with two risky assets. Overconfidence...

This paper focuses on egocentric biases in financial decisions. Subjects first design a portfolio, whereby each combination of assets yields the same expected return and variance of returns. (...)

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.

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...

In this paper we relate individual risk attitude as elicited by binary lotteriesand certainty equivalents to market behavior. By analyzing 26 independentmarkets with a total of 280 participants we show that binary lottery choicesand certainty equivalents are poorly correlated. Only lottery...

This paper focuses on egocentric biases in financial decisions. Subjects first designa portfolio, whereby each combination of assets yields the same expected returnand variance of returns. They are then confronted with two alternative portfolios;the average portfolio and the portfolio of one’s...

This paper investigates the robustness of hindsight bias in experimental asset markets, the time invariance of the different experimental risk elicitation methods of certainty equivalents and binary lottery choices, and their correspondence.

This paper investigates (i) the robustness of hindsight bias in experimental assetmarkets, (ii) the time invariance of the different experimental risk elicitationmethods of certainty equivalents and binary lottery choices, and (iii) their correspondence.The results of our within-subjects...