The costs and beliefs impliedby direct stock ownership

Daniel Barth

No 1657, Working Paper Series from European Central Bank

Abstract: This paper develops a structural model of the costs and beliefs required to rationalize household direct stock ownership. In the model, households believe they can learn information about individual stock returns through costly research. The model provides a novel explanation for many empirical features of household portfolios. Further, the model identifies the distributions of both household research costs and household beliefs about the predictability of individual stock returns. Identification depends only on households JEL Classification: G02, G11

Keywords: direct stock ownership; household beliefs; research costs; under-diversification (search for similar items in EconPapers)
Date: 2014-03
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20141657

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