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Past Performance Framing and Investors’ Belief Updating : Is Seeing Long-Term Returns Always Associated with Smaller Belief Updates?

Gerhard, Patrick - 2017

Prior research shows that investors with smaller belief updates trade less actively, which positively affects their return performance. We examine the effect of different default frames of presenting past return information on investors' belief updating. In particular, we analyze whether...

Persistent link: https://www.econbiz.de/10012971743

When Expectations Become Aspirations : Reference-Dependent Preferences and Liquidity Constraints

Kramer, Berber - 2015

A large body of literature suggests that consumers derive utility from gains and losses relative to a reference point. This paper shows that such reference dependence can affect savings in opposite directions depending on whether people face liquidity constraints. Existing models for wealth and...

Persistent link: https://www.econbiz.de/10013024753

Prominent numbers, indices and ratios in exchange rate determination and financial crashes : in Economists' models, in the field and in the laboratory

Pope, Robin; Selten, Reinhard; Kube, Sebastian; Hagen, … - 2009

laboratory. Third, nominalist heuristics are incompatible with expected utility theory which excludes the evaluation stage, and … are also incompatible with prospect theory which assumes that, while the evaluation stage can involve systematic mistakes … model and identify what is a mistake, and b) decision makers can maximise. However, contrary to prospect theory, in the …

Persistent link: https://www.econbiz.de/10003867227

Merging of opinions under uncertainty

Bier, Monika; Engelage, Daniel - 2010

We consider long-run behavior of agents assessing risk in terms of dynamic convex risk measures or, equivalently, utility in terms of dynamic variational preferences in an uncertain setting. By virtue of a robust representation, we show that all uncertainty is revealed in the limit and agents...

Persistent link: https://www.econbiz.de/10003980912

Learning from unrealized versus realized prices

Ngangoue, Kathleen; Weizsäcker, Georg - 2015

that is roughly consistent with the benchmark theory. …

Persistent link: https://www.econbiz.de/10011280005

A dynamic model of investor decision-making : how adaptation to losses affects future selling decisions

Lee, Carmen; Kräussl, Roman; Lucas, André; Paas, … - 2008

We conduct an experiment to test whether the size of a loss and the time in a losing position affect investors’ adaptation to the loss situation and, subsequently, whether this adaptation affects future investment decisions. As investors adapt to losses, their neutral reference point shifts...

Persistent link: https://www.econbiz.de/10011377365

Performance measurement, expectancy and agency theory : an experimental study

Sloof, Randolph; Praag, Mirjam van - 2006

noise in the performance measure. In contrast, expectancy theory as developed by psychologists predicts lower effort levels …

Persistent link: https://www.econbiz.de/10011343251

Information characteristics and errors in expectations : experimental evidence

Antoniou, Constantinos; Harrison, Glenn W.; Igel Lau, Morten - 2015

We design an experiment to test the hypothesis that, in violation of Bayes Rule, some people respond more forcefully to the strength of information than to its weight. We provide incentives to motivate effort, use naturally occurring information, and control for risk attitude. We find that the...

Persistent link: https://www.econbiz.de/10011347344

Robustly optimal monetary policy in a microfounded new keynesian model

Adam, Klaus; Woodford, Michael - 2012

We consider optimal monetary stabilization policy in a New Keynesian model with explicit microfoundations, when the central bank recognizes that private-sector expectations need not be precisely model-consistent, and wishes to choose a policy that will be as good as possible in the case of any...

Persistent link: https://www.econbiz.de/10011489843

Collective risk-taking decisions with heterogeneous beliefs

Gollier, Christian - 2003

Suppose that a group of agents having divergent expectations can share risks efficiently. We examine how this group should behave collectively to manage these risks. We show that the beliefs of the representative agent is in general a function of the group.s wealth level, or equivalently, that...

Persistent link: https://www.econbiz.de/10011507677