The Professor will present the Paper: Ambiguity and private investors' bahavior after forced fund liquidations
We investigate individual investors' decisions under time-varying ambiguity (VVIX) using a setting of plausibly exogenous forced mutual fund liquidations at a German brokerage. Investors reinvest 87% out of forced liquidations when the refund occurs on a day of low ambiguity and 0% when it occurs on a day of high ambiguity. Instead of reinvesting, investors keep the refund in their cash holdings. The effect reverses approximately six months after the liquidation. If investors reinvest, they decrease their risk-taking under ambiguity. Our results are not driven by rebalancing decisions, experiencing losses, or attention and are robust to alternative measures of ambiguity.