Prof. Dr. Christoph Merkle

Associate Professor of Finance

Christoph Merkle is Associate Professor of Finance at Kühne Logistics University. From 2012 to 2017 he was Assistant Professor of Finance and Banking at the University of Mannheim, where he also obtained his PhD. Before, he studied Economics at the University of Cologne. He was a visiting scholar at Duke University, Fuqua School of Business, and Aalto University.

Merkle’s research interests include Behavioral Finance, Household Finance, Experimental Economics, Decision Theory, and Financial Forecasting. Among other topics, he analyzes how individual investors convert their beliefs and preferences into actions in financial markets. In newer work, he explores how financial professionals process information and form expectations.


Tel: +49 40 328707-234
Fax: +49 40 328707-209


Selected Publications

Copy reference link   DOI: 10.1093/rof/rfw011

Abstract: Return-chasing investors almost exclusively consider top-performing funds for their investment decisions. When drawing conclusions about the managerial skill of these top performers, they tend to neglect fund volatility and the cross-sectional information contained in the number of funds and the distribution of skill. In multiple surveys of sophisticated retail investors, we show that they do not fully understand the role of chance in experimental samples of fund populations. Respondents evaluate each fund in isolation and do not sufficiently account for fund volatility. They confuse risk taking with manager skill and are thus likely to over-allocate capital to lucky past winners.

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Abstract: In a panel survey of individual investors, we show that investors’ second-order beliefs—their beliefs about the return expectations of other investors—influence investment decisions. Investors who believe others hold more optimistic stock market expectations allocate more of their own portfolio to stocks even after controlling for their own risk and return expectations. However, second-order beliefs are inaccurate and exhibit several well-known psychological biases. We observe both the tendency of investors to believe that their own opinion is relatively more common among the population (false consensus) and that others who hold divergent beliefs are considered to be biased (bias blind spot).

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Copy reference link   DOI: 10.1016/j.jbankfin.2014.03.042

Abstract: To understand how real investors use their beliefs and preferences in investing decisions, we examine a panel survey of self-directed online investors at a UK bank. The survey asks for return expectations, risk expectations, and risk tolerance of these investors in three-month intervals between 2008 and 2010. We combine the survey data with investors’ actual trading data and portfolio holdings. We find that investor beliefs have little predictive power for immediate trading behavior. The exception is a positive effect of increases in return expectation on buying activity. Portfolio risk levels and changes are more systematically related to return and risk expectations. In line with financial theory, risk taking increases with return expectations and decreases with risk expectations. In response to their expectations, investors also adjust the riskiness of assets they trade.

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Abstract: The better-than-average effect describes the tendency of people to perceive their skills and virtues as being above average. We derive a new experimental paradigm to distinguish between two possible explanations for the effect, namely rational information processing and overconfidence. Experiment participants evaluate their relative position within the population by stating their complete belief distribution. This approach sidesteps recent methodology concerns associated with previous research. We find that people hold beliefs about their abilities in different domains and tasks which are inconsistent with rational information processing. Both on an aggregated and an individual level, they show considerable overplacement. We conclude that overconfidence is not only apparent overconfidence but rather the consequence of a psychological bias.

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Academic Positions


Since 2017Associate Professor of Finance at Kühne Logistics University, Hamburg, Germany
2012-2017Assistant Professor of Finance at University of Mannheim, Mannheim, Germany
2015Visiting Researcher at Duke University, Fuqua School of Business, Durham, NC, USA
2013Visiting Researcher at Aalto University, School of Business, Helsinki, Finland
2010-2012Research and Teaching Assistant at University of Mannheim, Mannheim, Germany





2011PhD in Finance (Dr. rer.pol.) at University of Mannheim, Mannheim, Germany
2007M.A. Economics (Dipl.-Volkswirt) at University of Cologne, Cologne, Germany