What is your opinion of Gerd Gingerenzer's work which shows that it in certain circumstances this bias is actually a good one to use?

I think this is an important component of investment decision. Most investors do not even realize that their decision are subject to this familiarity bias.

Humans are creatures of habit so does it surprise anyone that we use habits in our investment decisions? It seems natural to me, although it does not seem like that best choice.

I think familarity may be a good bias.Because if the investor is familiar with the field or the country he invests,he will be able to obtain much more information and also be able to analyze the situation,which is benefit for him to reduce risks.
Although diversifying is a good way to reduce risks, it will distract investors to make each investment decisions more carefully.To some extent,diversifying may raise risk.

I agree with the author that people will choose to invest in products and services that are most familiar to them. If everyone else is investing in something than they might as well join in. At the same time if everyone decided to invest in the same exact companies as everyone else than the return on investment would not be as high.

I feel choosing to put your personal money into stocks or bonds is already risky enough because you never know how the economy will hold up or if the company will be successful or a failure. If you as an investor just do what everyone else is doing or just sticking with the familiars than you probably wont make a great return on investment as you planned on.

People are always going to go with what is familiar. This kind of decision making goes through a persons mind every single day and companies like coke-a-cola and McDonnalds have made huge profits off of it. If you are driving around looking for somewhere to eat and you do not know the area well and you see lots of restaurants but there is one with those familiar big golden arches you will likely go there to eat. the familiar is less risky and its what people are comfortable with. This will apply to investment decisions as well

I think a certain portion of Americans want to be more patriotic, especially after the events of 9/11. We also find safety in the choices of familiar investments because we believe them to be more dependable, even if foreign investments are more profitable.

This article made a lot of sense to me because I tend to act the same way - I would much rather chose something that is familiar to me, because the unfamiliar would seem to have a larger risk associated with it, despite the fact that this is often times untrue.

The bias sometimes come form the familler area, such as a engneer will buy more tech-related stock. Howvere, i think this is also related to the understanding of the industral. If I am a senantist i will have more understanding on the hi-tech area therefore I might be able to chose the better campany based on the imformation i have. I think this kind of bias also reduce the risk of the investment.

The familiarity bias seems like it would be the best way to go. Although I wonder if people know that they are probably investing in the stocks that are most familiar to them, it makes sense because it seems like there would be less risk.

When it comes to international stocks, the familiarity bias could perhaps be a useful tool due to the fact that there are external factors that you may not know about in other countries. As American's we hear very little about the world outside of our borders unless war breaks out somewhere. In that light, it makes sense for Americans to keep their money here. Domestically however, I think Americans assume that 'since a company has been around for a long time, they are reliable' and thus they have lower risk. Throw in the fact that American's in general know little about the stock market and can be very lazy, and I can see why this familiarity bias may come into play.

When America produces a quarter of the world GDP, I dont think this is much of a problem.

Still, I dont find this surprising. It would take research and time to figure out the potential of stocks in places elsewhere such as Ireland, Italy, Greece, Japan, or whatnot. Unless the company is well known like Sony, Toyota, Samsung, LG, etc, I think its sort of a matter of convenience to get stock of companies in a person's home market.

To someone first looking to invest in stocks investing in a company overseas may seem more daunting and make the investor uneasy. I think people may be more willing to take a bigger risk if it's a company they feel more comfortable with even though it seems a bit counter intuitive that the bigger risk would make them more comfortable.