TY  - JOUR
AU  - Nieuwerburgh,Stijn Van
AU  - Veldkamp,Laura
TI  - Information Immobility and the Home Bias Puzzle
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13366
PY  - 2007
Y2  - September 2007
UR  - http://www.nber.org/papers/w13366
L1  - http://www.nber.org/papers/w13366.pdf
N1  - Author contact info:
Stijn Van Nieuwerburgh
Stern School of Business
New York University
44 W 4th Street, Suite 9-120
New York, NY 10012
Tel: 646/284-4141
Fax: 646/284-4141
E-Mail: svnieuwe@stern.nyu.edu

Laura Veldkamp
Stern School of Business
New York University
44 W Fourth Street,Suite 7-77
New York, NY 10012
Tel: 212/998-0527
Fax: 212/995-4218
E-Mail: lveldkam@stern.nyu.edu
AB  - Many argue that home bias arises because home investors can predict home asset payoffs more accurately than foreigners can. But why doesn't global information access eliminate this asymmetry? We model investors, endowed with a small home information advantage, who choose what information to learn before they invest. Surprisingly, even when home investors can learn what foreigners know, they choose not to: Investors profit more from knowing information others do not know. Learning amplifies information asymmetry. The model matches patterns of local and industry bias, foreign investments, portfolio out-performance and asset prices. Finally, we propose new avenues for empirical research.
ER  -