A unique dataset from a large Ponzi scheme allows me to study the spreading process of word-of-mouth investment information. Investors could join the scheme only by invitation from an existing member, and I can observe how the idea spreads from one person to the next based on the inviter-invitee...

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...

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...

Using a representative online panel from the US, we examine how individuals' macroeconomic expectations causally affect their personal economic prospects and their behavior. To exogenously vary respondents' expectations we provide them with different professional forecasts about the likelihood...

We examine the effect of investors' prior experience with mutual fund families on their subsequent investment decisions. Using a sample from a large discount broker, we find that investors are significantly more likely to purchase funds from families with which they have previous experience. Our...

Recent years have brought a gradual shift of responsibility for pension provisions, financial planning, health care and various insurances from governmental institutions and firms to individuals. To tackle this challenge, individuals need applied financial literacy and not merely theoretical...

We study how macroeconomic growth experienced throughout a person's lifetime affects the decision to participate in the stock market, and how this interacts with political education. For people who have been raised in the market economy of the Federal Republic of Germany, we find that...

This study evaluates individuals' abilities to avoid investment mistakes driven by behavioral biases and analyzes the relationship between investment competence and the propensity to seek or rely on professional advice. We use novel survey data collected from a representative sample of Swiss...

We propose a method to measure people's subjective models of the macroeconomy. Using a sample of 2,200 households representative of the US population and a sample of more than 1,000 experts, we measure beliefs about how the unemployment rate and the inflation rate respond to four different...

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,...