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...

We analyze different investment strategies by comparing them over a variety of investment horizons. As expected Utility Theory cannot explain the attractiveness of empirically observed strategies, we apply a behavioral approach instead. In particular, we assess attractiveness from the viewpoint...

We provide evidence that people do not consistently incorporate their beliefs into investment decisions. Our experimental findings indicate that selling is considerably less belief-driven than buying. This difference stems from selling decisions in the presence of paper losses for which we...

Greed has been shown to be an important economic motive. Both the popular press as well as scientific papers have mentioned questionable practices by greedy bankers and investors as one of the root causes of the 2008 global financial crisis. In spite of these suggestions, there is as of yet no...

Despite the compelling evidence on gain-loss-domain-dependent behavior, research on domain-dependent portfolio diversification is scarce. In an online experimental study, we recruited 251 experienced US retail investors to select portfolios that differ in asset correlation and risk measures in...