We document that prior portfolio choices influence investors' expectations about asset values, and their future choices. We find that people update more from information consistent with their prior choices, leading to sticky portfolios over time. These effects are related to how the brain's...

​Using data from the Panel Study of Income Dynamics (PSID), I document that childhood experience of father's job loss decreases the propensity to own stocks as an adult. If this experience takes place at the age of 5–10 years, the probability of owning stocks decreases by 2.9 percentage...

We propose that a hyperinflation event has a long-lasting effect on household investment behavior. We want to investigate whether future stock market participation can be influenced by a single extreme macroeconomic instability episode. We use data from the Brazilian Institute of Geography and...

Empirical 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...

Based on recent empirical evidence which suggests that as investors gain experience, their investment performance improves, we hypothesize that the specific mechanism through which experience translates into better investment returns is closely related to learning from investment mistakes. To...

We relate Google search volumes, proxying for economic concerns of households (FEARS), to individual investor trading. The trading data come from a large German brokerage covering more than 100 thousand investors over ten years. When FEARS is high, individual investors are on the sell side of...

In this paper, we disentangle investor sentiment into two components: mood and household attitudes towards the economy. We apply acoustical analysis to the daily top ten of music downloads in iTunes for Germany to derive a novel and direct measure for mood. We match this novel mood index with...

Based on large-scale survey data from the 2006-2012 waves of the US Health and Retirement Study (HRS) we show that individual portfolio decisions are influenced by a variety of traits and facets traditionally investigated in the field of personality psychology. Two personality traits that taken...

The basic paradigm of asset pricing is in vibrant flux. The purely rational approach is being subsumed by a broader approach based upon the psychology of investors. In this approach, security expected returns are determined by both risk and misvaluation. This survey sketches a framework for...

We contribute to the literature by developing a model that studies the incentives of individuals to engage in market timing when their ability to trade is unknown. We characterize the optimal investment decision process and provide empirical predictions. Using administrative data from the...