In this research the focus is on emergent behaviour in large groups of stockmarket participants. In contrast to established views of the capital market, we do notassume that market participants make rational investment decisions based on fullinformation about important macroeconomic figures such...

The overvaluation hypothesis (Miller 1977) predicts that a) stocks are overvalued inthe presence of short selling restrictions and that b) the overvaluation increases in the degree ofdivergence of opinion. We design an experiment that allows us to test these predictions in thelaboratory. The...

In the experimental scenario several agents repeatedly invest in n (n _ 2)state-specic assets. The evolutionarily stable and equilibrium (Blume andEasley, 1992) portfolio for this situation requires to distribute funds accordingto the constant probabilities of the various states. The dierent...

The results of an asset market experiment, in which 64 subjects trade two assets oneight markets in a computerized continuous double auction, indicate that objectivelyirrelevant information influences trading behavior. Moreover, positively and negativelyframed information leads to a particular...

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...

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...

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 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...