Our research addresses the effect of shared vs. mixed group identities in an information cascade game. We vary whether subjects always choose after a decision maker who shares the same identity or after a decision maker with a different identity. We find that subjects’ inclination to follow their predecessor is stronger in groups uniquely consisting of ingroup members compared to mixed groups. We relate this result to recent social cognition research.

Experimental asset markets with a constant fundamental value ($\mathrm{F}\mathrm{V}$) have grown in importance in recent years. A methodological examination of the robustness of experimental results in such a setting which has been shown to produce bubbles, however, is lacking. In a laboratory experiment with 280 subjects, we investigate whether specific design features are sufficient to influence experimental results. In detail, we (1) vary the visual representation of the price chart, and (2) provide subjects with full information about the FV process. We find overvaluation and bubble formation to be reduced when trading prices are displayed at the upper end of the price chart. Surprisingly, we do not find any effects when subjects have full information about the FV process.

This study investigates the impacts of behavioral finance on stock market volatility. The primary aims are to explain the reasons behind changes in the S&P 500 price within the context of behavioral finance and to analyze investor behavior in response to these changes. To achieve this, the research employs time-series analysis over a 10-year period, focusing on the S&P 500, real interest rates, consumer confidence, market volatility and credit default swaps while considering the effects of behavioral biases. The findings reveal several significant correlations: rising real interest rates negatively affect stocks due to loss aversion and sentiment. Conversely, higher consumer confidence tends to positively influence the stock market, driven by herding behavior and optimism. Additionally, market volatility shows a negative correlation with the S&P 500, influenced by risk aversion, recency bias and herding behavior. Moreover, an increase in credit default swap rates leads to stock market declines, primarily influenced by risk perception, loss aversion and herding behavior.

We report the effects of framing settings in annuity demand after conducting a survey-based experiment with members of a Dutch occupational pension plan. We gave participants the option to allocate up to 20% of their projected pension accrual to a lump sum. In particular, we investigated the joint effects of consumption and investment frames and gain and loss frames. We present strong evidence for framing effects in annuity demand. Framing effects remain significant when we control for individual characteristics. We also find robust evidence of individual characteristics influencing annuity demand, highlighting the importance of heterogeneity among participants, for example risk aversion, time preference and trust in the pension fund. Gender and long-term debt positions have significant impact how one responds to framing. We conclude that Dutch plan members generally welcome the partial lump sum option over mandatory full annuitization. The application of frames appears to predictively steer annuity demand. The precise effect framing may have, would probably also depend on the institutional environment, which predefines the perspective through which individuals filter annuities.

This special issue on financial knowledge and retirement security builds on prior studies in this journal on the economic causes and consequences of financial literacy for retirement security.

This paper analyzes whether herding and skillful managers may coexist. When herding appears, managers tend to present poor timing abilities; however, a weak herding level (a result commonly found in pension funds) may evidence a mixed scenario, where some managers develop skills, and others follow the herd. Additionally, when informational cascades emerge, some managers may act as leaders, anticipating others’ movements. Nonetheless, this anticipatory skill does not mean that leaders also anticipate market movements and present timing skills. Our results show herding and inter-temporal herding in a sample of Spanish pension funds, though the imitation behavior is not strong. We also find evidence of a mixed scenario, in which some non-herding managers present timing skills, while herding funds are not able to develop these abilities. Finally, we find successful timing for certain leaders, showing that the anticipation of others’ movements does not show real timing abilities.