Barber and Odean study the relationship between trading activity and returns. They find that households who trade more have a lower net return than other households. They argue that these results cannot emerge from a model with rational traders and instead attribute these findings to...

This paper addresses two puzzles about voter turnout. The first is that high income families are more likely to vote, even after controlling for age and education. The second is the large number of registered voters that do not vote (again, a more pronounced phenomenon among low income...

Since the work by Stigler on the economics of information in the early 1960s, economists have paid closer attention to the role of search for information. However, search methods are not considered in the theory of portfolio choice. We present a model of investor search behavior in order to...

Since Markowitz (1959), we deal with the uncomfortable stylized fact called the diversification puzzle- most investors hold only few individual stocks in their portfolios, though the mean-variance portfolio selection model requires many stocks. This paper demonstrates that the ex post...

This paper demonstrates the degree of under-diversification in equity portfolios can be explained by income risk (or other forms of risks faced by the household; e.g., unemployment risk). We present a model of investor diversification behavior in order to provide a framework by which to evaluate...

This paper accounts for the U.S. wealth inequality; we study ex ante identical households that face uninsured idiosyncratic shocks to their labor endowments and portfolio performances. The approach is motivated by numerous data sources indicating there is a great deal of inequality in households...

This paper estimates the Elasticity of Intertemporal Substitution (EIS) using household actual return. The approach is motivated by numerous data sources indicate that the median US stockholder has a portfolio contains three to four individual stocks, rather than a diverse bundle. Thus,...

Studies of household stock market participation report low participation rates. The explanations cited are that the fixed costs associated with participation and high risk aversion discourage households from buying stocks. However, the low participation rate findings are unchallenged. We argue...

This paper estimates the risk aversion for households accounting for their lifetime consumption risk. Households view the overall lifetime uninsured consumption risk when they optimize resources, which based on micro data varies across households. Thus, representing households' consumption by...