Do investors optimize, follow heuristics, or listen to experts?

Abstract

In the experimental scenario several agents repeatedly invest in n (n 2)\nstate-speci c assets. The evolutionarily stable and equilibrium (Blume and\nEasley, 1992) portfolio for this situation requires to distribute funds according\nto the constant probabilities of the various states. The di erent treatments\nendow none, one, three, or all subjects in groups of eight investors each with\nprobability information. Will investments follow the theoretical benchmark\nor the 1=n-heuristic of equal investments in all assets? Further, will agents\nwith probability information be asked and paid for advice on how to invest?\nAlthough investment does not converge as predicted, portfolios of informed\nagents re\nect the probabilities of states, and even uninformed agents do not\ninvest according to the 1=n-heuristic. Advice is demanded and readily paid\nfor. Surprisingly, clients do not always follow the recommendation. Competition\namong advisors reduces their fees as expected.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 3 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.