An Experiment on Diversification and Path Dependence

Brian Kluger and Jennifer Miele

Journal of Behavioral Finance, 2021, vol. 22, issue 2, 155-169

Abstract: In an experiment where subjects can allocate their wealth between cash and two risky assets, we analyze path-dependent portfolio choices. The experiment is designed to isolate cases where subjects have no prior experiences, and cases where subjects experience isolated changes in wealth or relative prices. We find that subjects tend to be less diversified after wealth or relative price changes, but that the result is much stronger for relative price changes. This erosion in portfolio diversification after relative price changes mainly stems from the choices of subjects with more diversified positions when there are no prior experiences.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/15427560.2020.1751628 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:hbhfxx:v:22:y:2021:i:2:p:155-169

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/hbhf20

DOI: 10.1080/15427560.2020.1751628

Access Statistics for this article

Journal of Behavioral Finance is currently edited by Brian Bruce

More articles in Journal of Behavioral Finance from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().