Prof. Nicole Branger from the University of Muenster is giving a VGSF research seminar on "Rational Laymen versus Over-Confident Experts: Who Survives in the Long Run?" on FRIDAY, Nov. 17th, from 15:30 to 17:00 at the WU Wien (Seminarraum D204, UZA 4, Nordbergstrasse 15, 1090 Wien, see http://www.wu-wien.ac.at/portal/ueber_wu/standorte/lageplan4 for a detailed plan). Please find the paper's abstract below. Nicole is going to be available for meetings on Friday. If you are interested, please contact Michael Halling (michael.halling(a)univie.ac.at). Best, Michael Halling Abstract In this paper we study the equilibrium in a heterogeneous economy with two groups of investors. Over-confident experts incorrectly assume that their signal for the drift of the dividend process is correlated with the true drift, but interpret the signal otherwise perfectly. Rational laymen avoid the experts' error, but their signal is noisier than that received by the experts. We investigate which of these two problems is more severe by computing long-run equilibrium consumption shares for the two groups. Our results indicate that overconfidence might be a more serious problem than limited information processing capability.