Most macroeconomic crises, such as the 2008 Global Financial Crisis, are associated with endogenous large changes in beliefs and understandings about the workings of the economy. Such downturns and crises are not consistent with the standard paradigm of a well-functioning competitive economy,...

In this paper, we study the relationship between intrahousehold bargaining styles, bar-gaining power and individual pension contributions and expected standard of living in retirement, using microdata from the German Panel on Household Finances (PHF) survey. The paper builds on a theoretical...

Interest-rate benchmark reform has revived short-rate modelling. One reason is that short-rate models provide a consistent framework in which different benchmarks, and contracts linked to them, can be compared. Another reason is that new benchmarks can be directly dependent on very short-term...

In an experiment on investors' financial decisions, we find variations in information can induce distinct signals-beliefs-decisions chains within agents. Subjects observe the time series of a risky index and of an additional signal, which helps predict returnsin some randomly chosen rounds, and...

We investigate the feature of housing markets under adaptive and heterogeneous expectations. Model agents have finite horizons and borrowings are constrained by the collateral value of housing stock. Our model shows that expectation-driven house price dynamics constantly change the direction of...

I introduce a model where fund family advisors optimize family values by secretly transferring performances among affiliated funds (cross-fund subsidization). Funds’ performances depend on unobservable manager abilities and cross-fund subsidization. By cross-fund subsidization, advisors...

How do individuals process non-diagnostic information? According to Bayes’ Theorem, signals which do not carry relevant information about the objective state of the world are treated as if no signal occurred. This paper provides experimental evidence that individuals update their expectations...

We introduce a financial market model populated by imperfectly informed mean-variance investors. The set-up is identical to the Capital Asset Pricing Model (CAPM), but with the perfect information assumption fully relaxed - that is, heterogeneous and biased beliefs on the asset means, variances...