Contributions

  • Harvey, Campbell R. - Contributor
  • National Bureau of Economic Research. - Contributor

Publication

2005 - National Bureau of Economic Research, Cambridge, Mass, Massachusetts

Language

English

Word Count

10,000 words, Guess

Page Count

40 pages

Identifiers

Classifications

  • LCCHB1

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.

Subjects

Series Statement

  • NBER working paper series -- working paper 11426.
  • Working paper series (National Bureau of Economic Research) -- working paper no. 11426.

Links

Other Editions

  • Investor competence, trading frequency, and home biasNational Bureau of Economic Research2005-01-01

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