Senior Fellows/Fellows

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Senior Fellows/Fellows

Naive Buying Diversification and Narrow Framing among Individual Investors

David HIRSHLEIFER, John GATHERGOOD, David LEAKE, Hiroaki SAKAGUCHI, Neil STEW
Individual investors buying multiple stocks on the same day often use a naïve diversification 1/N heuristic, dividing purchase value equally across stocks. Yet very few investors maintain a 1/N portfolio allocation. Instead, investors appear to narrowly frame their buy-day decision independently of...
Keywords: investor behavior, portfolio allocation, naive diversification, narrow bracketing
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Annual Conference

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Household Finance

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May 2024

Mutual Risk Sharing and Fintech: The Case of Xiang Hu Bao

Hanming FANG, Xiao QIN, Wenfeng WU, Tong YU
Unlike standard insurance where an intermediary–the insurance company–collects premiums and pays reimbursements for the enrollees, mutual risk sharing directly shares losses among participants. Meaning ‘mutual aid’ in Chinese, Xiang Hu Bao (XHB) was the largest online mutual risk sharing pla...
Keywords: Mutual risk sharing, FinTech, Separating equilibrium, Advantageous selection, Sharing economy
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Annual Conference

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Investment Finance

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May 2014

Mutual Fund Competition, Managerial Skill, and Alpha

Nagpurnanand PRABHALA, Gerard HOBERG, Nitin KUMAR
What economic forces limit mutual fund managers from generating consistent outperformance? We propose and test the hypothesis that buy-side competition from other funds matters. We make three contributions. First, we propose new style-based spatial methods to identify the customized rivals of each f...
Keywords: Mutual Funds, alpha, skill, persistence, Competition, peers, benchmarking
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Annual Conference

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Real Estate and Urban Economics

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May 2019

Multiple Tranches Information Asymmetry and the Impediments to Mortgage Renegotiation

Sanket KORGAONKAR
This paper examines how the creation of asset-backed security tranches disperses ownership of an asset–the pool of mortgages–subsequently impeding renegotiation of the underlying delinquent loans. I describe how multiplicity of tranches worsens the agency problem between a residential mortgage s...
Keywords: Securitization, Mortgage Servicing, Loan Modifications, financial crisis
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Annual Conference

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Real Estate and Urban Economics

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May 2025

Mortgages, Subways and Automobiles

Sumit AGARWAL, Yeow Hwee CHUA, Pulak GHOSH, Soumya GHOSH, Liuyang SHE
We examine the impact of subway expansions on mortgage repayment behavior in Delhi, India. Using administrative data from one of India’s largest mortgage lenders, we estimate that households in postal codes with newly opened stations experience a 4.42% decrease in mortgage delinquencies and a 1.38...
Keywords: Subway, Public Transit, Household Finance, Mortgage, Delinquency, Prepayment, Financial Constraints, Inequality
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