Search results for: Author=Schmelzer, André [5]

2017
Beyond Information: Disclosure, Distracted Attention, and Investor Behavior
Journal of Behavioral and Experimental Finance
2017
Committing the English and the Continental Way – An Experiment
2017/16
Max Planck Institute for Research on Collective Goods
Bonn
2017
Abstract
On the doctrinal surface, there is a deep divide between common and continental law when it comes to the origin of contractual obligations. Under continental law, in principle a unilateral promise suffices. Common law by contrast requires consideration. When it comes to deciding cases, the divide is much less pronounced. But for the most part the law does not govern people's lives through adjudication. It matches or molds their moral intuitions. We test these intuitions in the lab. If consideration is required, participants believe that all participants make more ambitious promises. But they themselves make a more cautious promise. These two effects cancel out, so that promises are not more likely to be kept with consideration.
Strategy-proofness of stochastic assignment mechanisms
2017/13
Max Planck Institute for Research on Collective Goods
Bonn
2017
Abstract
This paper compares two prominent stochastic assignment mechanisms in the laboratory: Random serial dictatorship (RSD) and top trading cycles with random endowments (TTC). In standard theory, both mechanisms are strategy-proof and Pareto-effcient for the house allocation problem without endowments. In the experiment, RSD outperforms TTC. This can be attributed to more dominant strategy play under RSD. The behavioral theory of obvious strategy-proofness can partly explain this difference in dominant strategy play. Generally, subjects with extremely high and low levels of contingent reasoning play their dominant strategies. These results suggest that one strategy-proof mechanism may outperform another one if individuals are boundedly rational.
2016
Single versus Multiple Randomization in Matching Mechanisms
2016/08
Max Planck Institute for Research on Collective Goods
Bonn
2016
Abstract
This paper experimentally studies an essential institutional feature of matching markets: Randomization of allocation priorities. I compare single and multiple randomization in the student assignment problem with ties. The Gale-Shapley deferred acceptance algorithm is employed after indifferences in school priorities are resolved by either random procedure. The main result is that a significant fraction of individuals prefers multiple to single randomization, although both are equivalent in expectation. Multiple randomization is perceived to be fairer. One theoretical explanation is the failure to disregard compound lotteries. These results show that random procedures are not inherently neutral with respect to preferences and fairness perceptions.
2015
Beyond Information: Disclosure, Distracted Attention, and Investor Behavior
2015/20
Max Planck Institute for Research on Collective Goods
Bonn
2015
Abstract
Financial disclosure documents provide investors with product details to facilitate informed investment decisions. We investigate whether the appearance – the visual frame – of disclosure documents impacts risk and return expectations and investment behavior. In our experiment, subjects decide about investments into real-life mutual funds. We nd that subjects expect a smaller return variance, invest more and gather less correct information if visual distractors are present in the visual frame. Results are in line with the distracted attention mechanism and suggest that disclosure policies should take the visual frame into account.