The effect of early and salient investment experiences on subsequent asset allocations—An experimental study

In two experiments on sequential asset allocation decisions between a safe and a risky asset, we find that an early market crash leads subjects to invest less in a risky asset in later periods, a result that is mediated by gender. In the first experiment subjects who experience a market bust early in the investment lifecycle invest less in a risky asset compared to subjects who experience a market boom, even when the subjects receive the exact...