Title: Source Recursive Utility with Lab and Field Evidence relating to Home Bias

Speaker: Soo Hong Chew, Southwestern University of Finance and Economics;National University of Singapore

Host: Gergely Horvath, Assistant Professor of Economics at Duke Kunshan University

Date: May 11(Thursday), 2023 

Time: 2PM – 3PM

Zoom ID: 937 6815 6895 Passcode: DKUECON

Venue: IB 2050

Abstract:

The source preference hypothesis of Fox and Tversky (1995) posits that people may have preference between equally distributed risks depending on the underlying source of uncertainty. Using a novel trailing digit design, we identify familiarity bias that is free from other confounds such as ambiguity aversion or information advantage. The first set of four experiments show familiarity bias in portfolio choice, valuation of stocks, and market indices. In a further experiment using real-life investors in Hong Kong, we find evidence of subjects’ home bias in stock holding being linked to familiarity bias but not to ambiguity aversion.

Bio:

Soo Hong Chew is Professor, Southwestern University of Finance and Economics, Emeritus Professor, National University of Singapore, Fellow at Econometric Society and Fellow at Society for the Advancement of Economic Theory. The renowned Singaporean economist is one of the pioneers in axiomatic non-expected utility models. His first published paper, entitled “A Generalization of the Quasilinear Mean with Application to the Measurement of Income Inequality and Decision Theory Resolving the Allais Paradox” Econometrica, 1983, is one of the earliest to propose an alternative to the paradigmatic expected utility model at the foundation of decision theory established by John von Neumann and Oskar Morgenstern. His research aims to investigate the multifaceted nature of decision-making (e.g., temporal choice and mechanism design) by adopting a wide range of methodologies beyond mathematical modeling, such as neuroimaging, genomics, and behavioral and experimental economics. He also served as the NUS’ lab for Behavioral x Biological Economics and the Social Sciences, which seek a deeper understanding of decision-making at the neural and molecular levels. Know more about him on the website:

https://fass.nus.edu.sg/ecs/research-highlights-chew-soo-hong/