Why Do Individuals Exhibit Investment Biases?
Speaker
Abstract
| Where do behavioral biases affecting investment decisions come from? We find that a significant proportion (about 20 to 56%) of investment biases such as home bias, loss aversion, performance chasing as well as trading intensity is attributable to genetic factors as opposed to the environment. We find that higher socioeconomic status, measured by net worth, reduces the importance of a genetic predisposition, while education does not seem to moderate the influence of genes. Consistent with the importance of underlying genetic factors, we find that the correlation between familiarity expressed in financial portfolios and in home location choices is essentially genetic. Our evidence contributes to a deeper understanding of investment biases, with potential implications for public policy. |
| Contact information: |
| Elvira Sojli |
