IDEAS home Printed from https://ideas.repec.org/p/zbw/upadbr/12.html
   My bibliography  Save this paper

Portfolio selection with time constraints and a rational explanation of insufficient diversification and excessive trading

Author

Listed:
  • Dolzer, Armin
  • Nietert, Bernhard

Abstract

Private investors have limited time available for learning about stocks as they need to divide their time between stock analysis and work. This paper analyzes the influence of learning constraintsin the form of time constraints on portfolio selection and derives both optimal portfolio holdings and time allocation. Under time constraints, rational private investors make portfolio choices similar to those ofi nvestors with bounded rationality, i.e., insufficient diversification and excessive trading. Thus, time constraints offer an alternative, fully rational explanation for these real-world investment phenomena, which have to date been interpreted primarily in the light of behavioral finance.

Suggested Citation

  • Dolzer, Armin & Nietert, Bernhard, 2006. "Portfolio selection with time constraints and a rational explanation of insufficient diversification and excessive trading," Passauer Diskussionspapiere, Betriebswirtschaftliche Reihe 12, University of Passau, Faculty of Business and Economics.
    • Handle: RePEc:zbw:upadbr:12
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/38778/1/523683898.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    excessive trading; insufficient diversification; learning; portfolio selection; time constraint;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:upadbr:12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/fwpasde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.