A stock exchange and the presence of functioning equity markets are part and parcel of an advanced market-based financial system. Previous research has also established that equity markets function more efficiently in the presence of supporting institutions such as property rights and rule of...

This study aims to determine the factors that affect financial literacy in Japan using data from Osaka University's Preference Parameter Study in Japan. We examined fourteen variables covering respondents' demographic, socio-economic, and psychological backgrounds drawn from social learning,...

This study extends the literature on portfolio choice under prospect theory preferences by introducing a two-period life cycle model, where the household decides on optimal consumption and investment in a portfolio with one risk-free and one risky asset. The optimal solution depends primarily on...

The current study examines individual decision making in the field of personal finance. A laboratory experiment investigates the way naïve advice influences the decisionmaking process. When advice is offered on demand, participants prefer expert over naïve advice. Although naïve advice is...

We propose a model of instrumental belief choice under loss aversion. When new information arrives, an agent is prompted to abandon her prior. However, potential posteriors may induce her to take actions that generate a lower utility in some states than actions induced by her prior. These losses...

This paper investigates whether the overpricing of out-of-the money single stock calls can be explained by Tversky and Kahneman's (1992) cumulative prospect theory (CPT). We argue that these options are overpriced because investors overweight small probability events and overpay for such...

We analyze the impact of the French 2012 financial transaction tax (FTT) on trading volumes, stock prices, liquidity, and volatility. We extend the empirical research by identifying FTT announcement and short-run treatment effects, which can distort difference-in-differences estimates. In...

This paper develops a structural model of the costs and beliefs required to rationalize household direct stock ownership. In the model, households believe they can learn information about individual stock returns through costly research. The model provides a novel explanation for many empirical...

This paper examines the willingness of private financial decision makers to pay for socially responsible investments (SRI). Our empirical analysis is based on unique data from a representative computer-based survey in Germany that especially comprised two stated choice experiments. The...

Based on unique data from a representative computer-based survey among financial decision makers in Germany, this paper empirically examines the determinants of socially responsible investments (SRI). Our econometric analysis implies that the perceived financial performance of SRI matters for...