Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/235555 
Year of Publication: 
2021
Citation: 
[Journal:] The Economic Journal [ISSN:] 1468-0297 [Volume:] 131 [Issue:] 638 [Publisher:] Oxford University Press [Place:] Oxford [Year:] 2021 [Pages:] 2413–2446-
Publisher: 
Oxford University Press, Oxford
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
Published Version’s DOI: 
Document Type: 
Article
Document Version: 
Accepted Manuscript (Postprint)

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