We study the effect of variation in correlation on investment decision in an experimental two asset application. Comparison of allocations across problems suggests that subjects neglect probabilistic information on the joint distribution of returns and base their allocations on the observed...

Empirically, mutual fund flows depend on past performance. It is unclear, however, whether this behavior is rational. Using the experimental approach we analyze behavior without confronting measurement problems of real data. We detect two anomalies: quot;Absolute Performance Effectquot; --...

Fair value depends on an estimate of the both cash flow and risk, which is not an easy task when valuing startup firms. We present a measurement instrument for the future risk of small and risky firms that follows the major propositions in accounting and finance. It differs from other valuation...

We explore the effects of social distance on reciprocal behavior in an experiment conducted over the Internet on three continents and in classroom laboratory sessions conducted in Israel and Spain.

Assume that two risk neutral agents with asymmetric information simultaneously expect a gain from zero-sum betting. Geanakoplos and Sebenius (1983) (henceforth GS) consider the case where the agents may re-evaluate the profitability of betting successively before the payments are realized. They...