Expectation formation in a new environment: Evidence from the German reunification

Goldfayn-Frank, Olga; Wohlfart, Johannes

doi:10.1016/j.jmoneco.2019.08.001

Cited by 56 publications

(25 citation statements)

References 48 publications

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“…We contribute to this research e↵ort by providing evidence that experiences of adverse local events that are non-informative of future returns trigger sharp adjustments in trading and risk-taking among retail investors. Thus, extrapolation of local experiences 1 Macroeconomic experiences have also been shown to matter for inflation expectations (Goldfayn- Frank and Wohlfart, 2019; Malmendier and Nagel, 2016), consumption decisions (Malmendier and Shen, 2019) and political attitudes (Alesina and Fuchs-Schündeln, 2007; Giuliano and Spilimbergo, 2014; Roth and Wohlfart, 2018). Evidence on the role of personal and peer experiences in shaping stock investment behavior is further provided by Cronqvist and Siegel (2014), Giannetti and Wang (2016), Kaustia and Knüpfer (2008) and Kaustia and Knüpfer (2012).…”

Section: Does Attention To Bankruptcies A↵ect Trading Behavior Througmentioning

confidence: 99%

The Trading Response of Individual Investors to Local Bankruptcies

Laudenbach,

Loos,

Pirschel

et al. 2020

SSRN Journal

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We use data from a German online brokerage and a survey to show that retail investors sharply reduce risk-taking in response to nearby firm bankruptcies, which are not predictive of returns. The e↵ects on trading are spatially highly concentrated, immediate and not persistent. They seem to operate through more pessimistic expected returns and increased risk aversion and do not reflect wealth e↵ects or changes in background risks. Investors learn about bankruptcies through immediate coverage in local newspapers. Our findings suggest that non-informative local experiences that make downside risks of stock investment more salient contribute to idiosyncratic short-term fluctuations in trading.

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Section: Does Attention To Bankruptcies A↵ect Trading Behavior Througmentioning

confidence: 99%

The Trading Response of Individual Investors to Local Bankruptcies

Laudenbach,

Loos,

Pirschel

et al. 2020

SSRN Journal

Self Cite

View full text Add to dashboard Cite

show abstract

“…We contribute to this research e↵ort by providing evidence that experiences of adverse local events that are non-informative of future returns trigger sharp adjustments in trading and risk-taking among retail investors. Thus, extrapolation of local experiences 1 Macroeconomic experiences have also been shown to matter for inflation expectations (Goldfayn- Frank and Wohlfart, 2019; Malmendier and Nagel, 2016), consumption decisions ( Malmendier and Shen, 2019) and political attitudes (Alesina and Fuchs-Schündeln, 2007; Giuliano and Spilimbergo, 2014; Roth and Wohlfart, 2018). Evidence on the role of personal and peer experiences in shaping stock investment behavior is further provided by Cronqvist and Siegel (2014), Giannetti and Wang (2016), Kaustia and Knüpfer (2008) and Kaustia and Knüpfer (2012).…”

mentioning

confidence: 99%

The trading response of individual investors to local bankruptcies

Laudenbach

Loos

Pirschel

et al. 2021

Journal of Financial Economics

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“…We further show that beliefs about the impact that new technologies have on the electoral process are crucial to our understanding of public attitudes towards them. This finding contributes to a wider body of literature that investigates how potentially erroneous beliefs that people hold drive their behavior [89][90][91][92][93][94][95].…”

Section: Plos Onementioning

confidence: 63%

Partisan self-interest is an important driver for people’s support for the regulation of targeted political advertising

2021

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The rapid emergence of online targeted political advertising has raised concerns over data privacy and what the government’s response should be. This paper tested and confirmed the hypothesis that public attitudes toward stricter regulation of online targeted political advertising are partially motivated by partisan self-interest. We conducted an experiment using an online survey of 1549 Americans who identify as either Democrats or Republicans. Our findings show that Democrats and Republicans believe that online targeted political advertising benefits the opposing party. This belief is based on their conviction that their political opponents are more likely to be mobilized by online targeted political advertising than are supporters of their own party. We exogenously manipulated partisan self-interest considerations of a random subset of participants by truthfully informing them that, in the past, online targeted political advertising has benefited Republicans. Our findings show that Republicans informed about this had less favorable attitudes toward regulation than did their uninformed co-partisans. This suggests that Republicans’ attitudes regarding stricter regulation are based not solely on concerns about privacy violations, but also, in part, are caused by beliefs about partisan advantage. The results imply that people are willing to accept violations of their privacy if their preferred party benefits from the use of online targeted political advertising.

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Expectation formation in a new environment: Evidence from the German reunification

Cited by 56 publications

References 48 publications

The Trading Response of Individual Investors to Local Bankruptcies

The Trading Response of Individual Investors to Local Bankruptcies

The trading response of individual investors to local bankruptcies

Partisan self-interest is an important driver for people’s support for the regulation of targeted political advertising

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