What's in a Name? An Experimental Examination of Investment Behavior

Abstract

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Behavioral finance: insights from experiments I: theory and financial markets

“…However, while they elicit participants' beliefs about the future prospects of the firms, their experiment does not require them to make investment decisions. In a further experiment, Ackert et al (2005) investigate the role of familiarity bias in explaining home bias, after controlling for information asymmetry as a possible non-behavioral explanation (by holding the information set constant). Their experiment allows them to separate the impact of firm identity and geographic location on participants' portfolio allocation decisions.…”

“…A lack of control over investors' disparate information renders an investigation such as that undertaken by Ackert et al (2005) highly problematic in naturally occurring markets.…”

“…Çelen and Kariv, 2004) or of home bias (e.g. Ackert et al, 2005) provide cases in point. Perhaps the most potent weapon at the hands of the experimenter is the ability to manipulate the levels of treatment factors thus allowing causal tests of the relationship between variables of theoretical interest and observed behavior, thus moving beyond the simple correlational analysis possible in studies reliant on proxies to capture unobserved variables.…”

Determinants of Investor Demand for Cross‐Listed Firms

“…However, the empirical evidence suggests that investors do not diversify their portfolios internationally and, instead, exhibit a preference for domestic equities or those located close to home. Familiarity with proximate firms may explain the home equity bias (Coval and Moscowitz, 1999; Huberman 2001; Ackert, Church, Tompkins, and Zhang, 2005). Investor recognition of a firm might also explain the cross‐sectional variation in the U.S. share of trading volume for Canadian cross‐listed firms.…”

Home bias in multimarket Cournot games

“…Anderson and van Wincoop (2004), for example, note that differences in preferences are impossible to distinguish from trade costs. 5 See, for example,Ackert et al (2005) for an experimental study of the equity home bias in investment behavior. 6 Salvo (2010) provides a similar suggestion based on an empirical analysis of the Brazilian…”