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Abstract:
We experimentally test overconfidence in investment decisions by offering participants the possibility to substitute their own for alternative investment choices. Overall, 149 subjects participated in two experiments, one with just one risky asset, the other with two risky assets. Overconfidence increases (i)
with the absolute deviation from optimal choices, (ii) with task complexity, and (iii) decreases with uncertainty as indicated by the difference between willingness to pay and to accept.

Risky Decision Making, Behavioral Finance, Portfolio Choice, Experimental Economics

Abstract:
In this paper we study information revelation on asset markets with endogenous and exogenous information. Our results indicate that superior information can only be exploited in the beginning of trading. Information disseminates on the market and informational advantages are counter-balanced over time. This result holds true for both exogenous and precise endogenous
information. Vague endogenous information, however, has no impact on individual payoff. Furthermore, we find that excessive trading decreases individual earnings.

Financial markets, Insider trading, Long-lived assets, Experimental economics

Abstract:
We investigate the intertemporal allocation behavior of spouses with different deterministic life expectations in an experiment. In each period of their life both partners propose a consumption level of which one is then randomly implemented. Thus both partners must anticipate their partner's and their own future choices when deciding how much to consume today. To allow for learning one experiences many "lives". In spite of the complex dynamics optimal behavior is rather simple and straightforward in the sense of conditional consumption smoothing. Participants achieve a rather high degree of efficiency that does not change over time. A substantial number of participants does not care whether their partner receives any payoff. This extremely selfish behavior is punished by their respective partners.

intra-household behavior, experimental economics, other regarding attitudes, reputation formation

Abstract:
It is often claimed that work opportunities decline with age, that hiring chances of older persons are poor. We investigate this by collecting questionnaire responses of personnel managers of German manufacturing firms, eliciting a hypothetical hiring decision based on three fictitious candidates. We rely on an age-neutral job and a small age-gap of 14 years between the youngest and the oldest candidate. The quasi-experimental design of the questionnaire allows to control for possible productivity differences and other economic explanations for declining hiring chances. The data show a 60 percentage point difference in hiring probabilities between the youngest and oldest candidate.

Discrimination, Hiring Decision, Labor Market, Questionnaire Study

Abstract:
Bidding challenges learning theories, since with the same bid, experiences vary stochastically: the same choice can result in either a gain or a loss. In such an environment the question arises how the nearly universally documented phenomenon of loss aversion affects the adaptive dynamics. We analyse the impact of loss aversion in a simple auction using the experienced-weighted attraction model. Our experimental results suggest that individual learning dynamics are highly heterogeneous and affected by loss aversion to different degrees. In any case, the experiment shows that loss aversion is not specific to rare decision making.

loss aversion, bidding, auction, experiment, EWA learning

Abstract:
We present an experimental test of a shirking model where monitoring intensity is endogenous and effort a continuous variable. Wage level, monitoring intensity and consequently the desired enforceable effort level are jointly determined by the maximization problem of the firm. As a result, monitoring and pay should be complements. In our experiment, between and within treatment variation is qualitatively in line with the normative predictions of the model under selfishness assumptions. Yet, we also find evidence for reciprocal behavior. The data analysis shows, however, that it does not pay for the employer to rely on the reciprocity of employees.

Incentive contracts, supervision, efficiency wages, experiment, incomplete contracts, reciprocity