Social Transmission Bias and Investor Behavior
We offer a new social approach to investment decision making and asset prices. Investors discuss their strategies and convert others to their strategies with a probability that increases in investment returns. The conversion rate is shown to be convex in realized returns. Unconditionally, active str...
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| Veröffentlicht in: | Journal of financial and quantitative analysis 2022-02, Vol.57 (1), p.390-412 |
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| container_issue | 1 |
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| container_title | Journal of financial and quantitative analysis |
| container_volume | 57 |
| creator | Han, Bing Hirshleifer, David Walden, Johan |
| description | We offer a new social approach to investment decision making and asset prices. Investors discuss their strategies and convert others to their strategies with a probability that increases in investment returns. The conversion rate is shown to be convex in realized returns. Unconditionally, active strategies (e.g., high variance and skewness) dominate, although investors have no inherent preference for these characteristics. The model has strong predictions for how the adoption of active strategies depends on investors’ social networks. In contrast with nonsocial approaches, sociability, self-enhancing transmission, and other features of the communication process determine the popularity and pricing of active investment strategies. |
| doi_str_mv | 10.1017/S0022109021000077 |
| format | Article |
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In contrast with nonsocial approaches, sociability, self-enhancing transmission, and other features of the communication process determine the popularity and pricing of active investment strategies.</description><subject>Anlageverhalten</subject><subject>Bias</subject><subject>Decision making</subject><subject>Investment</subject><subject>Investments</subject><subject>Investor behavior</subject><subject>Investors</subject><subject>Kommunikation</subject><subject>Popularity</subject><subject>Prices</subject><subject>Return on investment</subject><subject>Skewness</subject><subject>Sociability</subject><subject>Social networks</subject><subject>Soziales Netzwerk</subject><subject>Systematischer Fehler</subject><subject>Theorie</subject><issn>0022-1090</issn><issn>1756-6916</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2022</creationdate><recordtype>article</recordtype><recordid>eNp1UEtLAzEQDqLgWv0B3hY8b01mH0mOtvgoFDy0npfZJKsp3U1N2oL_3ixb6EGcw8zhew0fIfeMThll_HFFKQCjksYVh_MLkjBeVlklWXVJkgHOBvya3ISwGTgANCHTlVMWt-naYx86G4J1fTqzGFLsdbrojybsnU9n5guP1vlbctXiNpi7052Qj5fn9fwtW76_LuZPy0wVUuyzUiuQOWja6JYDIG-Llsu8oaXUrUIELpAZqSpToBHAGl2iQaNZo7goOeYT8jD67rz7PsQf6o07-D5G1lABlzIvSogsNrKUdyF409Y7bzv0PzWj9VBL_aeWqElHjVGut-Gs4EIUeaxMREp-ssWu8VZ_mnP6_8a_4M1tqQ</recordid><startdate>20220201</startdate><enddate>20220201</enddate><creator>Han, Bing</creator><creator>Hirshleifer, David</creator><creator>Walden, Johan</creator><general>Cambridge University Press</general><scope>OQ6</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope><orcidid>https://orcid.org/0000-0002-0264-0699</orcidid></search><sort><creationdate>20220201</creationdate><title>Social Transmission Bias and Investor Behavior</title><author>Han, Bing ; Hirshleifer, David ; Walden, Johan</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c498t-5dc2932d0bdf722a7f4f793b059dfcaa278a1e9c6e4ae821bd5aeaed1bc7857a3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2022</creationdate><topic>Anlageverhalten</topic><topic>Bias</topic><topic>Decision making</topic><topic>Investment</topic><topic>Investments</topic><topic>Investor behavior</topic><topic>Investors</topic><topic>Kommunikation</topic><topic>Popularity</topic><topic>Prices</topic><topic>Return on investment</topic><topic>Skewness</topic><topic>Sociability</topic><topic>Social networks</topic><topic>Soziales Netzwerk</topic><topic>Systematischer Fehler</topic><topic>Theorie</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Han, Bing</creatorcontrib><creatorcontrib>Hirshleifer, David</creatorcontrib><creatorcontrib>Walden, Johan</creatorcontrib><collection>ECONIS</collection><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Journal of financial and quantitative analysis</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Han, Bing</au><au>Hirshleifer, David</au><au>Walden, Johan</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Social Transmission Bias and Investor Behavior</atitle><jtitle>Journal of financial and quantitative analysis</jtitle><addtitle>J. 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| ispartof | Journal of financial and quantitative analysis, 2022-02, Vol.57 (1), p.390-412 |
| issn | 0022-1090 1756-6916 |
| language | eng |
| recordid | cdi_proquest_journals_2627993452 |
| source | EBSCOhost Business Source Complete; Cambridge University Press Journals Complete |
| subjects | Anlageverhalten Bias Decision making Investment Investments Investor behavior Investors Kommunikation Popularity Prices Return on investment Skewness Sociability Social networks Soziales Netzwerk Systematischer Fehler Theorie |
| title | Social Transmission Bias and Investor Behavior |
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