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Household search choice: theory and evidence

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  • Yosef Bonaparte
  • Frank Fabozzi

Abstract

Since the work by Stigler (1961) 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 behaviour in order to provide a framework by which to evaluate our empirical evidence on the role of search in portfolio selection and performance. We study two types of search methods: informal and professional. We show that the income, wealth and risk preference of households influence their search choice.

Suggested Citation

  • Yosef Bonaparte & Frank Fabozzi, 2011. "Household search choice: theory and evidence," Applied Economics, Taylor & Francis Journals, vol. 43(26), pages 3835-3847.
    • Handle: RePEc:taf:applec:v:43:y:2011:i:26:p:3835-3847
    DOI: 10.1080/00036841003724460
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    1. Yosef Bonaparte & Russell Cooper, 2009. "Costly Portfolio Adjustment," NBER Working Papers 15227, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Bonaparte, Yosef & Cooper, Russell & Zhu, Guozhong, 2012. "Consumption smoothing and portfolio rebalancing: The effects of adjustment costs," Journal of Monetary Economics, Elsevier, vol. 59(8), pages 751-768.

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