Keeping up with the joneses and the home bias

Beni Lauterbach, Haim Reisman

Research output: Contribution to journalArticlepeer-review

26 Scopus citations


We argue that when individuals care about their consumption relative to that of their neighbours, a home bias emerges, that is investors overweight domestic stocks in their portfolios. Domestic stocks are preferred because they also serve the objective of mimicking the economic fortunes and welfare of the investor’s neighbours, countrymen, and social reference group. We also demonstrate that globalization mitigates the home bias, and derive a modified international CAPM.

Original languageEnglish
Pages (from-to)225-234
Number of pages10
JournalEuropean Financial Management
Issue number2
StatePublished - Jun 2004


  • F30
  • G11
  • G12
  • G15
  • Home bias
  • International CAPM
  • International diversification
  • Relative preferences


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