%0 Report
        %A Gorodnichenko, Yuriy
%A Yin, Xiao
        %T Higher-Order Beliefs and Risky Asset Holdings
        %D 2024
        %8 2024 Jul
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 17120
        %U https://www.iza.org/publications/dp17120
        %X We combine a customized survey and randomized controlled trial (RCT) to study the effect of higher-order beliefs on U.S. retail investors' portfolio allocations. We find that investors' higher-order beliefs about stock market returns are correlated with but distinct from their first-order beliefs. Furthermore, the differences between the two vary systematically according to investor characteristics. We use information treatments in the RCT to create exogenous differential variations in first- and higher-order beliefs. We find that an exogenous increase in first-order beliefs increases the portfolio share allocated to the stock market (risky assets), while an exogenous increase in higher-order beliefs reduces it.
        %K expectations
%K surveys
%K higher-order beliefs
%K asset pricing