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Home-Market Bias! Investment Behavior From The Persepctive Of Behavioral Economics In The German Stock Market

Author

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  • Claudia PITTERLE

    (Doctoral School of Economics and Business Administration, University Alexandru Ioan Cuza Iasi- Romania)

Abstract

Studies of the investor culture of both private and institutional German investors show a clear overweighting of German equity portfolios compared with international equity portfolios. This overweighting does not stop at institutional investors. It reduces returns and leads to increased risks in the long run. Explanations for this lie in heuristics and distorted perceptions, also called home bias and overconfidence effect, which lead to this investor behavior. This article describes these phenomena from the perspective of behavioral economics using heuristics.

Suggested Citation

  • Claudia PITTERLE, 2022. "Home-Market Bias! Investment Behavior From The Persepctive Of Behavioral Economics In The German Stock Market," CrossCultural Management Journal, Fundația Română pentru Inteligența Afacerii, Editorial Department, issue 2, pages 143-148, December.
    • Handle: RePEc:cmj:journl:y:2022:i:2:p:143-148
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    More about this item

    Keywords

    German Stock Market; Private and Institutional Investment Portfolios; Home- Bias; Heuristics; Behavioral Economics; Behavioral Finance;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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