The Impact of Local Media on Household Investment Decisions

Information is costly, and agents have different information-processing abilities. Households have a limited capacity to actively seek out information, and it is therefore likely that they are reliant on local media for information. In this dissertation, I explore the effect of local media on households’ investment decisions in the context of the two asset classes most widely participated in: housing and equity. In the first part of the dissertation, I document the potential causal impact of local media on households’ housing investment decisions, which in aggregate leads to a predictive relationship between local media and subsequent housing returns. In the second part of the dissertation, I document the potential causal impact of local media on households’ equity trading behavior