The Eurozone fiscal crisis has created pressure for institutional harmonization, but skeptics argue that cultural predispositions can prevent convergence in behavior. Our paper derives a robust cultural classification of European countries and utilizes unique data on natives and immigrants to...

One possible determinant of overpricing on asset markets is a lack of self-control abilities of traders. Self-control is the individual capacity to override or inhibit undesired behavioral tendencies such as impulses and to refrain from acting on them. We implement the first experiment that is...

The Eurozone fiscal crisis has created pressure for institutional harmonization, but skeptics argue that cultural predispositions can prevent convergence in behavior. Our paper derives a robust cultural classification of European countries and utilizes unique data on natives and immigrants to...

With a unique data set from New Zealand which allows us to assign each bet to individual bettors, we analyze the impact of experience on behavior and success in non-parimutuel (fixed odds) sports betting markets. We find that experienced bettors bet more on favorites than inexperienced bettors...

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...

By comparing the trading behavior of individual investors in different market conditions, this paper tests the theory that attribution bias - inflated confidence in one's own skill - creates overconfident traders. In a bull market, investors incorrectly attribute trading successes (luck) to...

High sentiment predicts low market returns and high arbitrage returns. This empirical evidence has important implications for portfolio optimization. Exploiting the eigenvalue-decomposition of the mean-variance portfolio, I show that its performance is the sum of two components: a market...

This study examines whether heterogeneous beliefs contribute to the incidence of the disposition effect. We measure optimism using elicited beliefs from incentivized experiments and surveys and link these measures to investment decisions using administrative register data. We find that...

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...

I study the determinants of mutual fund managers' expectations about the stock market and its implications for decision making and fund performance. Using a direct measure of managers' market expectations extracted from mutual funds' semi-annual reports, I find that fund managers extrapolate...