The Standard Portfolio Choice Problem in Germany

Christoph Breunig, Steffen Huck, Tobias Schmidt and Georg Weizsäcker

EconStor Open Access Articles and Book Chapters, 2021, vol. 131, issue 638, 2413–2446

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: D1 D14 D84 G11 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Journal Article: The Standard Portfolio Choice Problem in Germany (2021)
Working Paper: The Standard Portfolio Choice Problem in Germany (2019)
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:zbw:espost:235555

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