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The 1/N Rule revisited: Heterogeneity in the naïve diversification bias

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  • Fernandes, Daniel

Abstract

This paper examines the naïve diversification bias, the tendency of consumers to diversify their investments beyond what is justifiable on economically rational grounds (Benartzi & Thaler, 2001). The naïve diversification bias is replicated across different samples using a within-participant manipulation of portfolio options. Only differences in focus on intuition predicted this bias. The more investors use intuitive judgments, the more likely they are to display the naïve diversification bias.

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  • Fernandes, Daniel, 2013. "The 1/N Rule revisited: Heterogeneity in the naïve diversification bias," International Journal of Research in Marketing, Elsevier, vol. 30(3), pages 310-313.
    • Handle: RePEc:eee:ijrema:v:30:y:2013:i:3:p:310-313
    DOI: 10.1016/j.ijresmar.2013.04.001
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Ola Mahmoud, 2022. "The Willingness to Pay for Diversification," Management Science, INFORMS, vol. 68(8), pages 6235-6249, August.
    2. Kim, Joonkyung & Zhao, Min & Soman, Dilip, 2023. "Converging vs diverging: The effect of visual representation of goal structure on financial decisions," International Journal of Research in Marketing, Elsevier, vol. 40(2), pages 362-377.
    3. Moon, Sangkil & Kim, Moon-Yong & Iacobucci, Dawn, 2021. "Content analysis of fake consumer reviews by survey-based text categorization," International Journal of Research in Marketing, Elsevier, vol. 38(2), pages 343-364.
    4. Ibrahim Filiz & Thomas Nahmer & Markus Spiwoks & Kilian Bizer, 2018. "Portfolio diversification: the influence of herding, status-quo bias, and the gambler’s fallacy," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 32(2), pages 167-205, May.
    5. Filiz, Ibrahim & Nahmer, Thomas & Spiwoks, Markus & Gubaydullina, Zulia, 2020. "Measurement of risk preference," Journal of Behavioral and Experimental Finance, Elsevier, vol. 27(C).
    6. Lynch, John G. & Bradlow, Eric T. & Huber, Joel C. & Lehmann, Donald R., 2015. "Reflections on the replication corner: In praise of conceptual replications," International Journal of Research in Marketing, Elsevier, vol. 32(4), pages 333-342.
    7. Mahmoud, Ola, 2022. "Second-order uncertainty and naive diversification," Economics Letters, Elsevier, vol. 216(C).
    8. Israel, Avi & Lahav, Eyal & Ziv, Naomi, 2019. "Stop the music? The effect of music on risky financial decisions: An experimental study," Journal of Behavioral and Experimental Finance, Elsevier, vol. 24(C).
    9. Sesil Lim & Bas Donkers & Patrick Dijl & Benedict G. C. Dellaert, 2021. "Digital customization of consumer investments in multiple funds: virtual integration improves risk–return decisions," Journal of the Academy of Marketing Science, Springer, vol. 49(4), pages 723-742, July.

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