Experimental economics, information economics, behavioral decision theory, market microstructure


Learning from unrealized vs. realized prices with Georg Weizsäcker. Forthcoming at AEJ: Micro.

Earlier version in pdf: DIW Discussion Paper 1487. 

Abstract: Our experiments investigate the extent to which traders learn from the price, differentiating between situations where orders are submitted before versus after the price has realized. In simultaneous markets with bids that are conditional on the price, traders neglect the information conveyed by the hypothetical value of the price. In sequential markets where the price is known prior to the bid submission, traders react to price to an extent that is roughly consistent with the benchmark theory. The difference’s robustness to a number of variations provides insights about the drivers of this effect.


Learning under Ambiguity: An Experiment on Gradual Information Processing. 

Revise & resubmit, JET.

Abstract: This experiment studies belief updating under ambiguity, using subjects’ bid and ask prices for an asset with ambiguous payoff distribution. Bid and ask quotes allow for distinguishing between the two main paradigms of updating under ambiguity–full Bayesian updating and maximum likelihood updating. We find substantial heterogeneity in updating behavior. The majority of subjects (54%) chose quotes that were in line with full Bayesian updating, but another non-negligible group (35%) behaved like maximum likelihood updaters.

The Common-Probability Auction Puzzle with Andrew Schotter.

Revise & resubmit, AER.

Abstract: This paper presents a puzzle in the behavior of experimental subjects when they engage in what we call common-value and common-probability auctions. In a common-value auction—the more-standard auction format—, uncertainty about the common-value item is defined over values, while in a so-called common-probability auction uncertainty is defined over probabilities. In contrast to the substantial overbidding found in common-value auctions, bidding behavior in common-probability auctions is consistent with risk-neutral Nash equilibrium bids and even exhibits slight underbidding. An additional experiment reveals that subjects priced the auctioned items equally, implying that differences in bidding behavior originate in the interaction between the type of uncertainty (uncertain values vs. uncertain probabilities) and strategic uncertainty.


Price dispersion and unobserved competition (with Boyan Jovanovic, TBD).

Deal or No Deal (with Eungik Lee and Andrew Schotter, TBD) 

Social choice under uncertainty (with Eric Bahel, TBD)

Adverse selection with correlation neglect (TBD).




Article on bounded rationality in financial markets:


"Sehen, um zu verstehen: Preiskenntnis fördert rationale Investitionsentscheidungen."

DIW Wochenbericht 34/2015 


Interview on information neglect in financial decision-making in "Nachgeforscht" series of DIW Berlin. 


Check the video.