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On the determinants of portfolio choice

  • Frijns, Bart
  • Koellen, Esther
  • Lehnert, Thorsten

This paper jointly analyzes traditional and behavioral concepts in a simple experimental setting which allows for the assessment of the relative importance of each factor and their joint behavior. Various hypotheses are tested in three portfolio choice models. Markowitz [Markowitz, H., 1952. Portfolio selection. Journal of Finance 7, 77-92] findings are analyzed and extended by behavioral concepts and socio-demographic variables. Models are expressed as conjoint choice models represented by a multinomial logit model. Data is collected in an experimental setting. We show that the level of the risk-free rate, an individual's risk aversion, market sentiment, self-assessed financial expertise, age and gender are determining factors of portfolio choice.

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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 66 (2008)
Issue (Month): 2 (May)
Pages: 373-386

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Handle: RePEc:eee:jeborg:v:66:y:2008:i:2:p:373-386
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