The Standard Portfolio Choice Problem in Germany

Christoph Breunig, Steffen Huck, Tobias Schmidt and Georg Weizsäcker
Additional contact information
Christoph Breunig: HU Berlin
Tobias Schmidt: QuantCo

No 171, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: We study an investment experiment with a representative sample of German households. Respondents invest in a safe asset and a risky asset whose return is tied to the German stock market. Experimental investments correlate with beliefs about stock market returns and exhibit desirable external validity at least in one respect: they predict real-life stock market participation. But many households are unresponsive to an exogenous increase in the risky asset\'s return. The data analysis and a series of additional laboratory experiments suggest that task complexity decreases the responsiveness to incentives. Modifying the safe asset\'s return has a larger effect on behaviour than modifying the risky asset\'s return.

Keywords: stock market expectations; stock market participation; portfolio choice; financial literacy; complexity (search for similar items in EconPapers)
JEL-codes: D01 D14 D84 G11 (search for similar items in EconPapers)
Date: 2019-07-30
New Economics Papers: this item is included in nep-eur, nep-exp, nep-fle and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The Standard Portfolio Choice Problem in Germany (2021)
Journal Article: The Standard Portfolio Choice Problem in Germany (2021)
Working Paper: The Standard Portfolio Choice Problem in Germany (2015)
Working Paper: The Standard Portfolio Choice Problem in Germany (2014)
Working Paper: The standard portfolio choice problem in Germany (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:171

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