Household Search Choice: Theory and Evidence
40 Pages Posted: 13 Mar 2006 Last revised: 10 Apr 2011
Date Written: September 28, 2009
Since the work by Stigler on the economics of information in the early 1960s, economists have paid closer attention to the role of search for information. However, search methods are not considered in the theory of portfolio choice. We present a model of investor search behavior in order to provide a framework by which to evaluate our empirical evidence on the role of search in portfolio selection and performance. We study two types of search methods: informal and professional. We show that the income, wealth, and risk preference of households influence their search choice.
Keywords: Investment decisions, financial behavior, search and risk behavior, econometrics, sample selection
JEL Classification: D01, D11, D12, D81, D83, G10, G11, G12
Suggested Citation: Suggested Citation