Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/208071 
Year of Publication: 
2019
Series/Report no.: 
Discussion Paper No. 171
Publisher: 
Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition, München und Berlin
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.
Subjects: 
Stock market expectations
stock market participation
portfolio choice
financial literacy
complexity
JEL: 
D1
D14
D84
G11
Document Type: 
Working Paper

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