Borrowing decisions affect most households, with large stakes and implications for subfields as varied as macroeconomics and industrial organization. I review theoretical and empirical work on household debt: its prevalence, level, growth, and composition, as well as various measures of consumer...

How does news about future economic fundamentals affect within-country and cross-country credit allocation? How effective is unconventional policy when financial crises are driven by unfulfilled favorable news? I study these questions by employing a two-sector, two-country macroeconomic model...

The aim of this study was to understand the potential effects of different information disclosures regarding risk on retirement investing behavior. The authors developed and tested two modifications to the section on investment performance on the prototype DOL Model Comparative Chart, providing...

We analyze the long-standing “annuity puzzle” through the lens of behavioral economics. We provide novel evidence that lessens the extent of the puzzle and shed some additional light on the real drivers of the decision to annuitize. Last, we discuss the policy implications of our findings

The basic paradigm of asset pricing is in vibrant flux. The purely rational approach is being subsumed by a broader approach based upon the psychology of investors. In this approach, security expected returns are determined by both risk and misvaluation. This survey sketches a framework for...

Financial innovations have resulted in an explosion in the number of so-called structured products being offered in the retail marketplace. To explain the complex structure of these hybrid debt securities, their prospectuses frequently employ numerical examples to illustrate the investment's...

Financial knowledge and the investment in information of retail investors have been under scrutiny on the side of regulators and of academics. Actually, increasing financial literacy of individuals is one of the promising avenues in order to increase financial markets participation. In this...

We examine how third party ratings and mandatory benchmark disclosure affect aggregate risk adjustment by retail investors. Morningstar changed its ratings methodology in June 2002. Before the change, the ratings were based on a risk-adjusted performance ranking of all US equity funds and highly...

We leverage the small open economy Switzerland as a testing ground for basic premises of macroeconomic models of endogenous information acquisition, using tailored surveys of firms and households. First, we show that firms perceive a greater exposure to exchange rate movements than households,...