In this paper, we apply the bounded rationality approach to aninvestment situation. In a simple setting where an investor decides betweena riskless bond and a risky asset, we distinguish three aspirationlevels: a lowest threshold that one wants to guarantee, an aspirationlevel given by investing...

Myopic loss aversion (MLA) has been established as one prominentexplanation for the equity premium puzzle. In this paper we address two issuesrelated to the effects of MLA on risky investment decisions. First, we assess therelative impact of feedback frequency and investment flexibility (via...

During the last three decades the ascent of behavioral economics clearly helped to bring down artificial disciplinary boundaries between psychology and economics. Noting that behavioral economics seems still under the spell of the rational choice tradition - and, indirectly, of behaviorism - we...

Global environmental protection is characterized as a public good. In contrast to the national level where the state is able to regulate external effects, there is a lack of supranational institutions which have enough power to force countries to reduce pollution levels. In spite of the...

This paper aims to analize the role of personal identity in decision making. To this end, it starts by reviewing critically the growing literature on economics and identity. Considering the ambiguities that the concept of social identity poses, our proposal focuses on the concept of personal...

For our experiment on corruption, we designed a coordination game to model the influence of risk attitudes, beliefs, and information on behavioral choices and determined the equilibria. We observed that the participants' risk attitudes failed to explain their choices between corrupt and...