Lejarraga, T., Woike, J. K., & Hertwig, R. (2019). Experiences and descriptions of financial uncertainty: Are they equivalent?. In R. Hertwig, T. Pleskac, T. Pachur, & the Center for Adaptive Rationality (Eds.), Taming uncertainty (pp. xx–xx). Boston, MA: MIT Press. doi:XXXXXXX


In Chapter 10 you learned about two different ways to learn about financial uncertainty. In this interactive element you have the opportunity to experience the experiment described in chapter 10 and to play an investment game. If you choose to experience the experiment, you should click the “experiment” button, and then choose the experimental condition that you would like to experiment, either “experience” or “description”. If you choose to play the investment game, choose “game”, and then select one of the three markets available. Keep investing for several periods, and you will see how well you have performed relative to other investment heuristics.


You have a portfolio of $100. In a series of monthly periods, you will have to allocate your portfolio between two options, a safe bank deposit that pays 0.25% monthly rate of return and a risky option. You make your allocation using the slider below. In each period, you will see the share price of the risky option (left graph), your portfolio (middle graph), and your earnings (right table). The graphs and table will grow across investment periods. The data corresponds to true a true market, but we have changed the date so you will not guess which market it is. Now, make your first allocation and click “invest”.

(at 0.25% monthly rate of return)

Stock share price



period stock yield capital payback
By selecting a new market the current game will be aborted and new game will be started

In this interactive element we have shown you the experimental materials that we used to study investment decisions. In those experiments, we found that investors who learned from experience made different decisions than those who learned from a graph. We also gave you the chance to play the investment game in different markets. If you chose to play the game, you may have used one of the several heuristics that we identified in our study. Which one did you use? We observed in out studies that the most frequent heuristic to navigate financial uncertainty was “momentum trading”, where people increase their risk exposure following a market rise, and reduce it following a drop.

If you chose to play the game under both conditions, you may have noticed that when learning about a shock from experience, you were inclined to take less risk than when learning from a graph. This phenomenon is called the “depression babies effect”, and we observe it in our experimental studies.

In the next interactive element, we show you how simulated experience can be harnessed to help people make better financial decisions.

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