In a large online experiment, we study how investors assess the relationship between their portfolio and the stock market. Participants either select a portfolio of stocks or are randomly assigned a portfolio from a U.S. stock market index. They state their portfolio return expectations...

In a panel survey of private investors, we show that investors use their beliefs about the stock market expectations of others in their investment decisions. These second-order beliefs have a positive effect on investing beyond own risk and return expectations, but they are inaccurate and...

Return-chasing investors almost exclusively consider top-performing funds for their investment decisions. When drawing conclusions about the managerial skill of these top performers, they tend to neglect fund volatility and the cross-sectional information contained in the number of funds and the...

The tendency of humans to shy away from using algorithms - even when algorithms observably outperform their human counterpart - has been referred to as algorithm aversion. We conduct an experiment to test for algorithm aversion in financial decision making. Participants acting as investors can...

This paper examines whether biased income expectations due to overconfidence lead to higher levels of debt-taking. In a lab experiment, participants can purchase goods by borrowing against their future income. We exogenously manipulate income expectations by letting income depend on relative...

This paper examines whether biased income expectations due to overconfidence lead to higher levels of debt-taking. We show suggestive evidence for a link between overconfidence and borrowing behavior in a representative survey of German households (GSOEP-IS). This motivates a laboratory...