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Information Immobility and the Home Bias Puzzle / Stijn Van Nieuwerburgh, Laura Veldkamp.
- Format:
- Book
- Author/Creator:
- Van Nieuwerburgh, Stijn.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w13366.
- NBER working paper series no. w13366
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2007.
- Summary:
- Many argue that home bias arises because home investors can predict home asset payoffs more accurately than foreigners can. But why doesn't global information access eliminate this asymmetry? We model investors, endowed with a small home information advantage, who choose what information to learn before they invest. Surprisingly, even when home investors can learn what foreigners know, they choose not to: Investors profit more from knowing information others do not know. Learning amplifies information asymmetry. The model matches patterns of local and industry bias, foreign investments, portfolio out-performance and asset prices. Finally, we propose new avenues for empirical research.
- Notes:
- Print version record
- September 2007.
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