Empirical and Experimental Study of the Behavior of Capital Market Participants
The recent crises, such as the financial and economic crisis and the debt and currency crisis have shown that neoclassical economics has lost its credibility. The concept of homo economicus describes humans as self-interested and rational, who maximize their own utility and have full information about the capital market. However, these characteristics could not be observed during the recent crisis.
An empirical and experimental research approach will be used to elucidate the behavior of the capital market participants. In particular, the focus would be on the following research topics: 1) "Overconfidence - the effects of positive and negative emotions." The research question seeks to address the robustness of the influence of emotions on the learning effects resulting due to feedback after the self-assessment. It is studied whether the repeated self-assessments and feedback cause the individuals to become detached from the overconfidence. 2) "Diversification behavior of the capital market participants - the effects of overconfidence." In this context the impact of positive and negative emotions on the diversification behavior of individuals is examined. 3) "Diversification behavior of the capital market participants - the effects of gambler's fallacy". This study aims at investigating the impact of gambler's fallacy on the diversification behavior of the capital market participants. The thesis shall be elaborated cumulatively.
Period of Dissertation