Objective The funded research investigates the role of expectations in financial decisions by asking two separate empirical questions. First, what systematic patterns appear in the expectations that the investor holds about relevant random variables? Second, can we establish that her expectations play a causal role for choices? The main tool in addressing these questions is the collection of data from laboratory experiments and large-sample household surveys. We also develop novel econometric methods and behavioral models of portfolio choice.The majority of the planned studies add to the literature on biases in expectations. They conform to the revealed-expectations paradigm of expected utility, but ask whether the underlying expectations are suboptimal in predictable ways: (i) Are rational expectations violated systematically more in markets where agents need to make complicated inferences about fundamental information – e.g. where the inference occurs at the interim stage, before agents can observe realized prices and other agents’ choices (like in Rational Expectations Equilibrium)? (ii) Are agents able to successfully process the covariance of returns in portfolio-choice problems? (iii) Are investment herds excessively large and stable because people do not realize that other agents whom they observe also rely on others? (iv) Why do many people embark in risky gambling strategies under the false perception that they will stop after a few losses? The answers to these questions will contribute to the understanding of investment choices generally, and unnecessary risk exposure in particular.In further studies, we ask about the causal link between expectations and choices. This will contribute to the evaluation of decision-theoretic models but can also inform economic policy, as the causal link from expectations to choices is an important component in the design of policy campaigns that work via affecting beliefs. We introduce artificially created instrumental variables into choice situations and use their exogenous influence to identify causal effects. Programme(s) FP7-IDEAS-ERC - Specific programme: "Ideas" implementing the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007 to 2013) Topic(s) ERC-SG-SH1 - ERC Starting Grant - Individuals, institutions and markets Call for proposal ERC-2010-StG_20091209 See other projects for this call Funding Scheme ERC-SG - ERC Starting Grant Coordinator HUMBOLDT-UNIVERSITAET ZU BERLIN Address Unter den linden 6 10117 Berlin Germany See on map Region Berlin Berlin Berlin Activity type Higher or Secondary Education Establishments Principal investigator Georg Heinrich Weizsaecker (Prof.) Administrative Contact Ingmar Schmidt (Dr.) Links Contact the organisation Opens in new window Website Opens in new window EU contribution No data Beneficiaries (7) Sort alphabetically Sort by EU Contribution Expand all Collapse all HUMBOLDT-UNIVERSITAET ZU BERLIN Germany EU contribution € 380 235,37 Address Unter den linden 6 10117 Berlin See on map Region Berlin Berlin Berlin Activity type Higher or Secondary Education Establishments Principal investigator Georg Heinrich Weizsaecker (Prof.) Administrative Contact Ingmar Schmidt (Dr.) Links Contact the organisation Opens in new window Website Opens in new window Other funding No data LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE United Kingdom EU contribution € 73 056,83 Address Houghton street 1 WC2A 2AE London See on map Region London Inner London — West Westminster Activity type Higher or Secondary Education Establishments Administrative Contact Maribel Glogowski (Ms.) Links Contact the organisation Opens in new window Website Opens in new window Other funding No data UNIVERSITY OF ABERDEEN Participation ended United Kingdom EU contribution € 0,00 Address King's college regent walk AB24 3FX Aberdeen See on map Region Scotland North Eastern Scotland Aberdeen City and Aberdeenshire Activity type Higher or Secondary Education Establishments Administrative Contact Crystal Anderson (Ms.) Links Contact the organisation Opens in new window Website Opens in new window Other funding No data DEUTSCHES INSTITUT FUR WIRTSCHAFTSFORSCHUNG DIW (INSTITUT FUR KONJUNKTURFORSCHUNG) EV Germany EU contribution € 438 534,54 Address Mohrenstrasse 58 10117 Berlin See on map Region Berlin Berlin Berlin Activity type Research Organisations Administrative Contact Meike Janssen (Ms.) Links Contact the organisation Opens in new window Website Opens in new window Other funding No data UCL Elizabeth Garrett Anderson Institute for Women’s Health Participation ended United Kingdom EU contribution € 195 157,66 Address Gower street WC1E 6BT London See on map Region London Inner London — West Camden and City of London Activity type Higher or Secondary Education Establishments Administrative Contact Greta Borg-Carbott (Ms.) Links Contact the organisation Opens in new window Website Opens in new window Other funding No data WISSENSCHAFTSZENTRUM BERLIN FUR SOZIALFORSCHUNG GGMBH Germany EU contribution € 82 291,20 Address Reichpietschufer 50 10785 Berlin See on map Region Berlin Berlin Berlin Activity type Research Organisations Administrative Contact Claudia Buchmann (Ms.) Links Contact the organisation Opens in new window Website Opens in new window Other funding No data THE UNIVERSITY COURT OF THE UNIVERSITY OF ST ANDREWS United Kingdom EU contribution € 53 054,40 Address North street 66 college gate KY16 9AJ St andrews See on map Region Scotland Eastern Scotland Clackmannanshire and Fife Activity type Higher or Secondary Education Establishments Administrative Contact Trish Starrs (Ms.) Links Contact the organisation Opens in new window Website Opens in new window Other funding No data
