Experimental economics, behavioral economics, applied micro, behavioral finance


Learning from unrealized vs. realized prices with Georg Weizsäcker.

         American Economic Journal: Microeconomics 2021, 13(2): 174–201.

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 in gradual information processing

Journal of Economic Theory 195 (2021) 105282.

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 subjects' reaction to information. 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 in what we call common-probability auctions. In common-value auctions, uncertainty is defined over values while, in common-probability auctions, uncertainty is defined over probabilities. We find that in contrast to the substantial overbidding found in common-value auctions, bidding in strategically equivalent common-probability auctions is consistent with Nash-equilibrium. Additional treatments reveal that subjects valued the auctioned items equally, implying that differences in bidding behavior originate in the strategic uncertainty of the auction.



Article on bounded rationality in financial markets:


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

DIW Wochenbericht 34/2015 


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