Johan Walden

Haas School of Business
University of California at Berkeley
545 Student services building, #1900
Berkeley, CA 94720
Tel: 510-643-0547

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Institutional Affiliation: University of California at Berkeley

NBER Working Papers and Publications

February 2019Visibility Bias in the Transmission of Consumption Beliefs and Undersaving
with Bing Han, David Hirshleifer: w25566
We model visibility bias in the social transmission of consumption behavior. When consumption is more salient than non-consumption, people perceive that others are consuming heavily, and infer that future prospects are favorable. This increases aggregate consumption in a positive feedback loop. A distinctive implication is that disclosure policy interventions can ameliorate undersaving. In contrast with wealth-signaling models, information asymmetry about wealth reduces overconsumption. The model predicts that saving is influenced by social connectedness, observation biases, and demographic structure; and provides a novel explanation for the dramatic drop in savings rates in the US and several other countries in recent decades.
February 2018Social Transmission Bias and Investor Behavior
with Bing Han, David Hirshleifer: w24281
We offer a new social approach to investment decision making and asset prices. Investors discuss their strategies and convert others to their strategies with a probability that increases in investment returns. The conversion rate is shown to be convex in realized returns. Unconditionally, active strategies (e.g., high variance and skewness) dominate, although investors have no inherent preference over these characteristics. The model has strong predictions for how adoption of active strategies depends on investors' social networks. In contrast with nonsocial approaches, sociability, self-enhancing transmission and other features of the communication process determine the popularity and pricing of active investment strategies.
January 2010Limited Capital Market Participation and Human Capital Risk
with Jonathan Berk: w15709
The non-tradability of human capital is often cited for the failure of traditional asset pricing theory to explain agents' portfolio holdings. In this paper we argue that the opposite might be true --- traditional models might not be able to explain agent portfolio holdings because they do not explicitly account for the fact that human capital does trade (in the form of labor contracts). We derive wages endogenously as part of a dynamic equilibrium in a production economy. Risk is shared in labor markets because firms write bilateral labor contracts that insure workers, allowing agents to achieve a Pareto optimal allocation even when the span of asset markets is restricted to just stocks and bonds. Capital markets facilitate this risk sharing because it is there that firms offload t...

Published: Jonathan B. Berk & Johan Walden, 2013. "Limited Capital Market Participation and Human Capital Risk," Review of Asset Pricing Studies, vol 3(1), pages 1-37.

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