We study portfolio diversification in an experimental decision task, where asset returns depend on a draw from an ambiguous urn. Holding other information identical and controlling for the level of ambiguity, we find that labeling assets as being familiar or from the homeland of subjects...

While the current European Central Bank deposit rate and 2-year German government bond yields are negative, the U.S. 2-year government bond and deposit rates are positive. Insights from Prospect Theory suggest that this situation may lead to an excess flow of funds into the United States. Yet...

Empirical research documents that overconfidence has a strong impact on investment decision. In this experimental study using a within-subject design and an asset allocation problem, we detail this relationship by introducing a stage of judgment (initial knowledge about the assets to invest in)...

We present the results of a simple, easily replicable, survey study based on lottery bonds. It is aimed at testing whether agents make investment decisions according to expected utility, cumulative prospect theory or optimal expectations theory, when they face skewed distributions of returns. We...

In this paper, we present the results of a simple, easily replicable, survey study based on lottery bonds. It is aimed at testing whether agents make investment decisions according to expected utility, cumulative prospect theory (Tversky-Kahneman, 1992) or optimal expectations theory...