Work

Keeping Up with the Joneses and the Home Bias

Year: 2004

Type: article

Abstract: We argue that when individuals care about their consumption relative to that of their neighbours, a home bias emerges, that is investors overweight domestic stocks in their portfolios. Domestic stocks are preferred because they also serve the objective of mimicking the economic fortunes and welfare of the investor's neighbours, countrymen, and social reference group. We also demonstrate that globalization mitigates the home bias, and derive a modified international CAPM.

Source: European Financial Management

DOI: 10.1111/j.1354-7798.2004.00248.x

Authors: Beni Lauterbach, Haim Reisman

Institutions: Bar-Ilan University, Technion – Israel Institute of Technology

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2147277469

FWCI: 3.451

Cites: 20

Cited by: 56

Related to: 10