Investors and academics increasingly criticize that features of employee stock option (ESO) programs reflect rent-extraction by managers (managerial power view). We use a unique European data set to investigate the relationship between the design of ESO programs and corporate governance...

An experiment examined the effect that the type and presentation format of information about investment options have on expectations held by investors about asset risk, returns, and volatility. Some respondents were provided with the names of investment options in addition to historical...

In a recent QJE-article, Gneezy and Potters (1997) present experimental evidence for the impact of feedback frequency on individual risk taking behavior in repeated investment decisions. They find an increased willingness to invest into a risky asset if less frequent feedback about the outcome...

In economic models, it is usually assumed that agents aggregate their private and all available public information correctly and completely. In this experiment, we identify subjects' updating procedures and analyze the consequences for the aggregation process. Decisions can be based on private...

Already in the 1930ies psychologists mentioned the tendency of people to see the self as the center of social judgment. This leads to egocentrically biased judgments when assessing others behavior. Since the first demonstration of this social projection bias in a study 1977 by Ross, Greene, and...

We perform a market experiment to investigate how average transaction prices react to the arrival of new information. Following a positive shock in fundamental value, prices underreact strongly; following negative shocks we find evidence of a much less pronounced underreaction. After the shock,...

In this paper we present experimental research examining the ability of individuals to make good retrospective evaluations of payment sequences. Inspired by the evidence on systematic biases in the retrospective evaluation of affective episodes involving pain and pleasure we designed choice...