The Standard Portfolio Choice Problem in Germany

37 Pages Posted: 2 May 2014

See all articles by Steffen Huck

Steffen Huck

Wissenschaftszentrum Berlin für Sozialforschung (WZB)

Tobias Schmidt

German Institute for Economic Research (DIW Berlin)

Georg Weizsacker

Humboldt University Berlin; DIW Berlin

Multiple version iconThere are 2 versions of this paper

Date Written: April 29, 2014

Abstract

We study behavior in an investment experiment conducted with a representative sample of German households. Respondents allocate a fixed budget between a safe asset and a risky asset whose returns are tied to the German stock market and earn monetary returns based on their decisions. Experimental investment choices correlate with beliefs about stock market returns and exhibit desirable external validity: They are a strong predictor for real-life stock market participation. The experimental set-up allows exogenous modification of the risky asset’s return but investments are inelastic except for financially savvy subsamples. A laboratory experiment accompanies the data collection and yields similar results.

Keywords: Stock market expectations, stock market participation, portfolio choice, artefactual field experiment

JEL Classification: D1, D14, D84, G11

Suggested Citation

Huck, Steffen and Schmidt, Tobias and Weizsacker, Georg, The Standard Portfolio Choice Problem in Germany (April 29, 2014). Available at SSRN: https://ssrn.com/abstract=2432045 or http://dx.doi.org/10.2139/ssrn.2432045

Steffen Huck

Wissenschaftszentrum Berlin für Sozialforschung (WZB) ( email )

Reichpietschufer 50
D-10785 Berlin, 10785
Germany

Tobias Schmidt

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Georg Weizsacker (Contact Author)

Humboldt University Berlin ( email )

Spandauer Str. 1
Berlin, D-10099
Germany

DIW Berlin

Mohrenstr. 58
Berlin
Germany

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