How do common investors behave? Information search and portfolio choice among bank customers and university students
Bank customers are not financial experts, and yet they make high-stakes decisions that can substantively affect personal wealth. Sooner or later, every individual has to take relevant investment decisions. Using data collected from financial advisors, bank customers and university students in Italy, this paper aims to reveal new insights about the decision processes of average non-expert investors: their investment goals, the information sets they consider, and the factors that ultimately influence decisions about investment products. Using four portfolio choice tasks based on data collected directly from financial advisors and their clients, we find that most subjects used a limited set of information, ignoring factors that conventional economic models usually assume drive investor behavior. Furthermore, we suggest that non-compensatory decision-tree models, which make no trade-offs among investment features, are parsimonious descriptions of investor behavior useful for improving the organization of financial institutions and in policy contexts alike. Copyright Springer-Verlag 2012
Volume (Year): 11 (2012)
Issue (Month): 2 (December)
|Contact details of provider:|| Web page: http://www.springer.com|
Web page: http://www.fondazionerosselli.it
More information through EDIRC
|Order Information:||Web: http://www.springer.com/economics/journal/11299|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- John G. Lynch , Jr. & Dan Ariely, 2000. "Wine Online: Search Costs Affect Competition on Price, Quality, and Distribution," Marketing Science, INFORMS, vol. 19(1), pages 83-103, April.
- Train,Kenneth E., 2009.
"Discrete Choice Methods with Simulation,"
Cambridge University Press, number 9780521747387, September.
- Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, September.
- Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
- Carlo Alberto Magni, 2009. "Investment decisions, net present value and bounded rationality," Quantitative Finance, Taylor & Francis Journals, vol. 9(8), pages 967-979.
- Berg, Nathan & Hoffrage, Ulrich, 2008. "Rational ignoring with unbounded cognitive capacity," Journal of Economic Psychology, Elsevier, vol. 29(6), pages 792-809, December. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:spr:minsoc:v:11:y:2012:i:2:p:203-233. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.