Second-order Beliefs and the Individual Investor


Egan, Daniel ; Merkle, Christoph ; Weber, Martin



DOI: https://doi.org/10.2139/ssrn.1571238
Document Type: Working paper
Year of publication: 2014
Place of publication: Mannheim
Publication language: English
Institution: Business School > ABWL u. Finanzwirtschaft, insbes. Bankbetriebslehre (Weber -2017)
Subject: 330 Economics
Classification: JEL: C90 , G01 , G11 , G17,
Abstract: In a panel survey of individual investors, we show that investors' second-order beliefs - their beliefs about the return expectations of other investors - influence investment decisions. Investors who believe others hold more optimistic stock market expectations allocate more of their own portfolio to stocks even after controlling for their own risk and return expectations. However, second-order beliefs are inaccurate and exhibit several well-known psychological biases. We observe both the tendency of investors to believe that their own opinion is relatively more common among the population (false consensus) and that others who hold divergent beliefs are considered to be biased (bias blind spot).

Dieser Eintrag ist Teil der Universitätsbibliographie.




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Egan, Daniel ; Merkle, Christoph ; Weber, Martin (2014) Second-order Beliefs and the Individual Investor. Mannheim [Working paper]


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