Economic theory suggests that households should invest their financial wealth in a combination of cash and a well-diversified equity portfolio. Yet, many households' equity investments are strongly concentrated in a few assets. Attempts to explain this discrepancy have included low levels of...

This paper examines the long-term impact of natural disasters on household portfoliochoices. In particular, we study this issue with the Wen Chuan Earthquake thatoccurred in China in 2008 as an exogenous natural disaster event. Previous literaturesfind that natural disasters can cause affected...

This chapter provides an overview of household finance. The first part summarizes key facts regarding household financial behavior, emphasizing empirical regularities that are inconsistent with the standard classical economic model and discussing extensions of the classical model and...

We use responses to a self-report survey and matched trading data to investigate the effects of personality (Big Five traits), IQ and financial literacy on individuals’ stock trading portfolios. Traits have small but significant effects: openness and extraversion are associated with...

Many financial situations present individuals with simple alternatives to solving complex problems. The value of these alternatives depends on whether individuals are sophisticated and know when they are better off opting out of complexity. We tested complexity's effects and evaluated...