The determinants of international investment and attention allocation: Using internet search query data

Jordi Mondria (), Thomas Wu and Yi Zhang

Journal of International Economics, 2010, vol. 82, issue 1, 85-95

Abstract: This paper explores the joint determination of home bias and attention allocation. We overcome the typical challenge associated with evaluating attention allocation theories by using a new internet search query dataset to measure how much information investors decide to process. Employing an instrumental variables approach, we find empirical evidence of a two-way causality between home bias and attention. Our estimates suggest that if all countries were to receive the same level of attention as the U.S., then the average home bias by U.S. investors would fall from 85.2% to 57.3%.

Keywords: Home; bias; Asymmetric; information; Attention; allocation; Internet; search; query (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (84)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:82:y:2010:i:1:p:85-95

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