We conduct controlled experiments in order to analyze individual trading behavior. Our results suggest that investors measure their gains relative to their initial wealth, and that this reference point together with past stock price changes determine the portfolio choices. Subjects choose a...

According to the traditional view held in finance returns of assets are determined by complete rationality of decision makers. Rational decisions are defined by a set of axioms that are universal and do not leave room for cultural differences. In this article we show that cultural differences do...

Prospect Theory is a widely accepted descriptive framework to model decisions under risk. However, it is limited to situations with finitely many outcomes. Moreover, it is discontinuous, i.e., small changes in a lottery can produce large differences in its utility, contrary to experiments. In...

The worldwide COVID-19 pandemic puts countries and their governments in an unprecedented situation. Strong countermeasures have been implemented in most places, but how much do people trust their governments in handling this crisis? Using data from a worldwide survey, conducted between March...

We present results from the rst large-scale international surveyon risk preferences, conducted in 45 countries. We show substantialcross-country dierences in risk aversion, loss aversion and probabilityweighting. Moreover, risk attitudes in our sample depend not only oneconomic conditions, but...

We study a number of large international military conflicts sinceWorld War II where we establish a news analysis as a proxy for theestimated likelihood that the conflict will result in a war. We findthat in cases when there is a pre-war phase, an increase in the warlikelihood tends to decrease...

Our paper explores the role of time preferences on household debt maturity choice. Wefind that in countries where people are more patient in the long term, planning horizons in householddebt portfolios are significantly longer, as the optimal maturity of loans is considerably higher.The...

This study proposes an analytical framework towards behavioral political economy of institutional change. It considers institutional changes as central government's choices under uncertainty, which are largely driven by the strategic outcomes in a behavioral coordination game between local...

This paper uses data from 14 Middle Income Countries in the Luxembourg Income Study database to examine the position of children in the income distributions, and to calculate child poverty prevalence, to assess how far children receive transfers from state social protection systems compared to...

Cohn et al. (2019) designed the field experiment about the lost wallets across 40 countries to examine whether people attempt to contact the owners to return the 17,000 wallets. We discussed the design flaw in their experimental settings by reanalyzing the relationship between the rates of...