Investor competence, trading frequency, and home bias
By: John R. Graham, Campbell R. Harvey, Hai Huang.
Contributors: Harvey, Campbell R.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11426; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11426.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Investments -- Psychological aspects.; Investments -- Decision making.; Portfolio management.; International finance.
Description: "People are more willing to bet on their own judgments when they feel skillful or knowledgeable (Heath and Tversky (1991)).  We investigate whether this "competence effect" influences trading frequency and home bias.  We find that investors who feel competent trade more often and have a more internationally diversified portfolio.  We also find that male investors, and investors with higher income or more education, are more likely to perceive themselves as competent investors than are female investors, and investors with lower income or less education.  Our results are unlikely to be explained by other hypotheses, such as overconfidence or information advantage.  Finally, we separately establish a link between optimism towards the home market and international portfolio diversification"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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Mode of access: World Wide Web.