NO.PZ2015111901000008
问题如下：
A
student meets with Liu after one of his lectures. The student is participating
in a mock investment competition that requires participants to create and
manage a fictitious equity portfolio. Even though international equities are
available as an investable asset class, the student elects to invest her
entire portfolio in domestic equities.
Liu
asks the student if she has ever considered including international equities in
her competition portfolio given their diversification benefits and higher
expected returns than domestic equities based on current consensus growth
forecasts. The student responds that she has not considered international
equities because she
Determine whether bounded
rationality has affected the student’s investment decision-making process. Justify
your response.
选项：
解释：
Guideline answer:
● Bounded rationality describes the phenomenon whereby people gather some (but not all) available information.
● The student does not behave totally rationally because she is not gathering full information to identify international equity investment opportunities.
● Her decision meets the criterion specified of creating and managing a fictitious equity portfolio but is not necessarily optimal.
● Although higher returns may be possible in international equities, investing fully in domestic equities satisfices within the totality of the investor’s decision-making environment.
The notion of bounded rationality recognizes that people are not fully rational when making decisions and do not necessarily optimize but rather satisfice when arriving at their decisions. People have informational, intellectual, and computational limitations. Bounded rationality describes the phenomenon whereby people gather some (but not all) available information, use heuristics to make the process of analyzing the information tractable, and stop when they have arrived at a satisfactory, but not necessarily optimal, decision.
The student does not behave totally rationally because she is not gathering full information to identify possible international equity investment opportunities and doesn’t have the knowledge to do so. Her behavior is boundedly rational because her decision meets the criterion specified of creating and managing a fictitious equity portfolio but is not necessarily optimal. Although the decision is suboptimal, because higher returns may be possible in global markets, it satisfices within the totality of the student’s decision-making environment. The student may have decided that she lacked the knowledge, time, and resources to research all alternatives. Given the student’s apparently limited knowledge of international equities markets, and considering time constraints and the sole criterion of investing in equities, the decision to invest all of her portfolio in US equities may be reasonable.
Yes. Bounded rationality does affect student’s decision. Bounded rationality will not let investors make decision rational, instead, it will make investors feel satisficing with their decision and do not pursue a perfect one, which based on available information. This student gives up a more rational international equities which have more return and better diversification while only focus on his/her known domestic one.
