What Drives the Heterogeneity in Portfolio Choice? The Role of Institutional, Traditional, and Behavioral Factors

Behavioural portfolio theory revisited: lessons learned from the field

“…6 Their conclusions support former findings that the probability to hold risky assets rises with the educational level (e.g., Campbell, 2006;Cole et al, 2014), that men are more likely to take financial risks than women (e.g., Jianakoplos and Bernasek, 1998;Sund en and Surette, 1998;Barber and Odean, 2001;Croson and Gneezy, 2009;Dohmen et al, 2011), and that older individuals are less likely to invest in risky assets (e.g., Ameriks and Zeldes, 2004;Curcuru et al, 2010). The positive relation between households' directly queried risk attitude and their risk-taking is also observed by Bertraut (1998), Dohmen et al (2011), Halko et al (2012, Guiso and Sodini (2013), Oehler and Horn (2019) and Oehler et al (2018a), providing support that investor's risk-taking is a function of investors' risk attitude (e.g., Nosic and Weber, 2010;Weber et al, 6 Kaustia et al (2017) also find that much of the information assigned to the factors sociability (see Hong et al, 2004;Brown et al, 2008), cognitive skills (see Christelis et al, 2010;Grinblatt et al, 2011) and health (see Rosen and Wu, 2004;Edwards, 2008) are already captured by households' directly queried risk attitude, which is why we do not control for these factors. 2013).…”

“…In addition to households’ RRA and wealth, households’ risk‐taking is influenced by household‐specific characteristics (denoted as ξ h in equations 1aand1b). Kaustia et al (2017) find that the education, gender and age of households’ FKP as well as households’ directly queried risk attitude are the most influential factors regarding households’ stock market participation. Their conclusions support former findings that the probability to hold risky assets rises with the educational level (e.g., Campbell, 2006; Cole et al , 2014), that men are more likely to take financial risks than women (e.g., Jianakoplos and Bernasek, 1998; Sundén and Surette, 1998; Barber and Odean, 2001; Croson and Gneezy, 2009; Dohmen et al , 2011), and that older individuals are less likely to invest in risky assets (e.g., Ameriks and Zeldes, 2004; Curcuru et al , 2010).…”

Behavioral Finance: History and Foundations

“…Whatever experience helps investors to overcome the decline of their cognitive skills, experience by itself is shown to reduce the influence of behavioral biases (Kaustia et al, 2008). Interestingly, personal experience also affects financial decisionmaking.…”

Behavioral Finance: Household Investment and Borrowing Decisions

“…While it is useful to review some of the theories, it is worth keeping in mind that most of them are not mutually exclusive and individually are likely to explain only a small part of the phenomenon. Indeed, Kaustia and Luotonen (2016) …”