A Behavioral Model for Asset Allocation
Financial Markets and Portfolio Management, Vol. 17, No. 1, pp. 15-42, 2003
Posted: 12 Sep 2005
This paper describes a study, in which we examine the diversification behavior of financial advisors. Learning from BENARTZI and THALER (2000) about investors' naive diversification strategies, we find evidence that the advisor's asset allocation can be described by a new behavioral portfolio model. To verify these findings we distributed questionnaires among several investment consultants who gave us information about their market expectations and three asset allocation recommendations. Their recommendations indeed seem to be described by the behavioral portfolio model. Finally, we examine losses of efficiency for their recommendations.
JEL Classification: G0, G1
Suggested Citation: Suggested Citation