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dc.contributor.authorDiao, Linanen_US
dc.date.accessioned2011-05-04en_US
dc.date.accessioned2012-04-11T09:29:54Z-
dc.date.available2012-04-11T09:29:54Z-
dc.date.issued2011en_US
dc.identifier.urihttp://hdl.handle.net/10419/56859-
dc.description.abstractEmpirical evidences show that investors tend to be biased toward investing in domestic (home bias) and local (local bias) stocks. Familiarity is considered to be one of the reasons. A similar concept was proposed by Goldstein and Gigerenzer (1999, 2002), known as the recognition heuristic: when choosing between two objects, of which only one is recognized, choose the recognized. Investors recognize or are familiar with local stocks, expect them to provide higher returns and, therefore, invest more in such stocks'. We conducted an experiment in Jena, Germany to test whether subjects show local bias and use recognition-based and familiarity-based portfolio strategies. We categorized them into an experienced and an inexperienced group; in addition, we used two data periods, i.e., bull market and bear market, to see if they behave differently in the two markets. Results show that all participants invested more of their endowments in the stock market in bull rather than bear market. All participants showed greater familiarity with local stocks. However, the experienced participants only invested more in local rather than recognized and familiar stocks; on the contrary, the inexperienced participants invested more in recognized and familiar but not local stocks. Our experiment shows no evidence that familiarity is a reason for local bias.en_US
dc.language.isoengen_US
dc.publisherUniv. [u.a.] Jenaen_US
dc.relation.ispartofseriesJena economic research papers 2011,010en_US
dc.subject.jelC91en_US
dc.subject.jelG11en_US
dc.subject.jelD03en_US
dc.subject.jelD14en_US
dc.subject.ddc330en_US
dc.subject.keywordrecognition heuristicen_US
dc.subject.keywordrecognition-based portfolio strategyen_US
dc.subject.keywordfamiliarity-based portfolio strategyen_US
dc.subject.keywordlocal biasen_US
dc.subject.stwAnlageverhaltenen_US
dc.subject.stwWahrnehmungen_US
dc.subject.stwPortfolio-Managementen_US
dc.subject.stwHome Bias Puzzleen_US
dc.subject.stwTesten_US
dc.titleRecognition-based and familiarity-based portfolio strategies: An experimental studyen_US
dc.typeWorking Paperen_US
dc.identifier.ppn657104728en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Jena Economic Research Papers, MPI für Ökonomik

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