A mutual-fund manager is more likely to hold (or buy, or sell) a particular stock in any quarter if other managers in the same city are holding (or buying, or selling) that same stock. This pattern shows up even when controlling for the distance between the fund manager and the stock in...

Theory suggests that, in the presence of local bias, the price of a stock should be decreasing in the ratio of the aggregate book value of firms in its region to the aggregate risk tolerance of investors in its region. We test this proposition using data on U. S. Census regions and states, and...

We postulate that agents make forecasts using overly simplified models of the world—i. e. , models that only embody a subset of available information. We then go on to study the implications of learning in this environment. Our key premise is that learning is based on a model-selection...