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“Consider the following fact. Sweden accounts for approximately 1 percent of the world economy. A rational investor in the United States or Japan would invest about 1 percent of his assets in Swedish stocks. Can it make sense for Swedish investors to invest 48 times more? No. [T]his reflects the well-known tendency of investors to buy stocks from their home country, something that economists refer to as the home bias.” — Richard H. Thaler, Cass R. Sunstein
Consider the following fact. Sweden accounts for approximately 1 percent of the world economy. A rational investor in the United States or Japan would invest about 1 percent of his assets in Swedish stocks. Can it make sense for Swedish investors to invest 48 times more? No. [T]his reflects the well-known tendency of investors to buy stocks from their home country, something that economists refer to as the home bias.