The paper explores the applicability of the satisficing approach. Inparticular, we investigate whether basic principles of aspiration formationand satisficing behavior are transferable between similar situations.Individuals are sequentially confronted with two risky investmenttasks, a simple and...

In this paper the authors experimentally test overconfidence in investment decisions by ordering participants the possibility to substitute their own for alternative investment choices.

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...

Contrary to the models of deterministic life cycle saving, we take itfor granted that uncertainty of one's future is the essential problem ofsaving decisions. However, unlike the stochastic life cycle models, we capturethis crucial uncertainty by a non-Bayesian scenario-based...

This experimental study, first, compares the individual valuations of two risk reduction mechanisms: self-insurance and self-protection. Second, it investigates these valuations when the loss amount is ambiguous, and compare these values with valuations when loss amounts are known. results...

This experimental study investigates whether individuals preferbounded rationality over rational choice theory when facing simpleinvestment tasks. First, participants state some personal parametersthat serve as an input to render a theoretical approach, namelysatisficing or optimality,...

The paper analyses on an experimental basis the phenomenon of non-optimal under-diversification in portfolio choice decisions and investigates the reasons behind it. The most important obstacles for optimal diversification are studied the correlation neglect hypothesis and the overconfidence...

The paper analyses on an experimental basis the phenomenon of non-optimal under-diversification in portfolio choice decisions and investigates the reasons behind it. The most important obstacles for optimal diversification are studied – the correlation neglect hypothesis and the overconfidence...

We experimentally test overconfidence in investment decisions by offering partic- ipants the possibility to substitute their own for alternative investment choices. Overall, 149 subjects participated in two experiments, one with just one risky as- set, the other with two risky assets....

We introduce a nonparametric method to compare risk aversion of different investors based on revealed preference methods. Using Yaari's (1969) [50] definition of “more risk averse than”, we show that it is sufficient to compare the revealed preference relations of two investors. This makes...