Are individual or institutional investors the agents of bubbles?

Jongmoo Jay Choi, Haim Kedar-Levy, Sean Sehyun Yoo

Research output: Contribution to journalArticlepeer-review

11 Scopus citations


Behavioral bubble models typically assume that uninformed trend-chasers, presumably individual investors, cause bubbles, while informed contrarian investors such as institutions, trade against bubbles. DeLong et al. (1990a) highlight that to be considered a "bubble", the mis-pricing must prevail in a large, diversified portfolio. To meet this criterion, we use a unique dataset of all transactions by investor type for all non-financial Korean firms, and find evidence at odds with such assumptions. Domestic individual investors systematically apply aggressive contrarian trades, while foreign and some domestic institutions are mostly trend-chasers. These findings suggest that institutional investors rather than individuals are agents of bubbles.

Original languageEnglish
Pages (from-to)1-22
Number of pages22
JournalJournal of International Money and Finance
StatePublished - 1 Dec 2015


  • Behavioral bubbles
  • Contrarian
  • Foreign investors
  • Individual investors
  • Institutional investors
  • Trend-chasing

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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