Stock market investment decisions of individuals are positively correlated with those of co-workers. Sorting of unobservably similar individuals to the same work-places is unlikely to explain our results, as evidenced by the investment behavior of individuals that move between plants. Purchases made under stronger co-worker purchase activity are not associated with higher returns. Moreover, social interaction appears to drive the purchase of within-industry stocks; an investment mistake. Overall, our results suggest a strong influence of co-workers on investment choices, but not an influence that improves the quality of investment decisions.
|Name||Discussion Paper in Economics|
|Publisher||University of Aberdeen|
- Individual investors
- peer effects
- social interaction
- investment decisions
- stock selection