Breunig, C;
Huck, S;
Schmidt, T;
Weizsäcker, G;
(2021)
The Standard Portfolio Choice Problem in Germany*.
The Economic Journal
, 131
(638)
pp. 2413-2446.
10.1093/ej/ueab006.
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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.
| Type: | Article |
|---|---|
| Title: | The Standard Portfolio Choice Problem in Germany* |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1093/ej/ueab006 |
| Publisher version: | https://doi.org/10.1093/ej/ueab006 |
| Language: | English |
| Additional information: | This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions. |
| Keywords: | Stock market expectations, stock market participation, portfolio choice, financial literacy, complexity |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10125350 |
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