Prior research shows that investors with smaller belief updates trade less actively, which positively affects their return performance. We examine the effect of different default frames of presenting past return information on investors' belief updating. In particular, we analyze whether...

Individual investors' beliefs (return expectations and risk perceptions) drive investment decisions, with larger updates of beliefs leading to more active trading, hurting performance. We examine how framing of past performance information affects investors' belief formation. In particular, we...

The study at hand deals with the expectations of professional analysts and novices in the context of foreign exchange markets. We analyze the respective forecasting accuracy and our results indicate that there exist substantial differences between professional forecasts and judgmental forecasts...

We analyze the influence of individuals' degree of extraversion and neuroticism on the determinants of their risk-taking behavior in investment decisions. As there are no studies that investigate the influence of personality traits on risk attitude, risk perception, and return expectations in...

The authors analyze the impact of individuals' degree of extraversion and neuroticism on their decision making in an experimental asset market. To establish this link between research on experimental asset markets and social psychology the authors use a unique approach that combines a...

Story-telling helps to define the human experience. Do people also use narratives to make sense of, and to act on, financial information? Three studies demonstrate that people's investment predictions and choices instead are by narrative thinking. Whereas neoclassical financial theory maintains...

Combining brokerage records and matching monthly survey measurements of a sample of individual investors from the Netherlands for the period April 2008 through March 2009, we examine how individual investors update their beliefs (return expectations and risk perceptions) and preferences (risk...

Confident investors trade more than less confident investors, but why? Prior research tests the ultimate relation between investor confidence and trading, but does not empirically examine the underlying mechanism that explains why confidence leads to trading. We complement the literature by...

This study examines whether heterogeneous beliefs contribute to the incidence of the disposition effect. We measure optimism using elicited beliefs from incentivized experiments and surveys and link these measures to investment decisions using administrative register data. We find that...

Human judgments are systematically affected by various biases and distortions. The main goal of our study is to analyze the effects of five well-documented behavioral biases — namely, the disposition effect, herd behavior, availability heuristic, gambler's fallacy and hot hand fallacy — on...