It has been widely documented that investment decisions of individual investors exhibit local bias. Yet little is known of how societal forces affect investors' portfolio allocations of local versus nonlocal assets. We propose that social capital, and trust in particular, decreases the local...

By comparing the trading behavior of individual investors in different market conditions, this paper tests the theory that attribution bias - inflated confidence in one's own skill - creates overconfident traders. In a bull market, investors incorrectly attribute trading successes (luck) to...