Stock market participation differs a lot across countries. Cultural dimensions could be a potential factor for that. We show that indeed uncertainty avoidance is linked to rates of stock market participation across countries. We can show even more that uncertainty avoidance has an indirect...

In the past decades, a multitude of judgmental and behavioral biases with regards to financial decision making has been found. But are these biases connected with each other? Are people prone to, e.g., illusion of control, usually also more prone to confirmation or hindsight bias? In this study...

We present new descriptive evidence on the immigrant-native gap in risk and time preferences in Germany, one of the most preferred host countries for immigration. Using the recent waves of the Socio-Economic Panel (SOEP) dataset, we find that the immigrant-native gap in risk preferences has...

Time preferences are central to human decision making; therefore, a thorough understanding of their international differences is highly relevant. Previous measurements, however, vary widely in their methodology, from questions answered on the Likert scale to lottery-type questions. We show that...

We extend the original form of Prospect Theory by Kahneman and Tversky from finite lotteries to arbitrary probability distributions, thus paving the way for applications in economics and finance. Moreover, we suggest a method how to incorporate a crucial step of the “editing phase” into...

We demonstrate that in simple 2 X 2 games (cumulative) prospect theory preferences can be evolutionarily stable, i.e. a population of players with prospect theory preferences can not be invaded by more rational players. This holds also if probability weighting is applied to the probabilities of...

We find that in cumulative prospect theory (CPT) with a concave value function in gains, a lottery with finite expected value may have infinite subjective value. This problem does not occur in expected utility theory. We characterize situations in CPT where the problem can be resolved. In...