Overconfidence, Financial Advice Seeking and Household Portfolio Under-Diversification

Asset Selection and Under-Diversification with Financial Constraints and Income: Implications for Household Portfolio Studies

Asset Selection and Under-Diversification with Financial Constraints and Income: Implications for Household Portfolio Studies

Empirical studies of household portfolios have shown that young and relatively poor households hold under-diversified portfolios that are concentrated in a small number of assets, a fact often attributed to various behavioral biases. We present a model that offers a potential rational alternative: we show that relatively poor investors; i.e., investors with little financial wealth, who receive ...

Loan Portfolio Diversification, Market Structure and Financial Stability of Banks

 The purpose of this study is to investigate the effect of bank loan portfolio diversification and market structure on the financial stability of banks in the countrychr('39')s capital market. In order to achieve the above goal, the financial data of 17 banks have been used as unbalanced panels in the period from 2005 to 2018. In this study, data analysis was performed using fixed effects model...

Overconfidence and diversification

Experimental evidence suggests that people tend to be overcon dent in the sense that they overestimate the accuracy of their private information. In this paper we show that risk-averse principals might prefer overcon dent agents in various strategic interactions because these agents help diversify the aggregate risk. This may help understanding why successful analysts and entrepreneurs tend to ...

Information Acquisition and Portfolio Under-Diversification

We develop a rational model of investors who choose which asset payoffs to acquire information about, before forming portfolios. Scale economies in information acquisition lead investors to specialize in learning about a set of highly-correlated assets. Knowing more about these assets makes them less risky and more desirable to hold. Benefits to specialization compete with benefits to diversifi...