Familiarity Breeds Investment

• DOI: 10.1093/rfs/14.3.659
• Publication Date: 2002-07-26T22:59:57Z
• Authors: Gur Huberman
• Keywords: Equity; Investment

Shareholders of a Regional Bell Operating Company (RBOC) tend to live in the area which it serves, and an RBOC's customers hold its shares rather than other RBOCs' equity. The geographic bias RBOC investors is closely related general tendency households' portfolios be concentrated, employees' own their employers' stocks retirement accounts, home country international arena. Together, these phenomena provide compeling evidence that people invest familiar while often ignoring principles portfolio theory.