Investment Decisions with Endogeneity: A Dirichlet Tree Analysis

Ignoring endogeneity when assessing investors’ decisions carries the risk of biased estimates for influence exogeneous marketing variables. This study shows how to overcome this challenge by using Pólya trees in quantification impacts on decisions. A total 2255 investors recruited received and opened a digital newsletter about investing daily. Given nature characterized heterogeneity endogeneity, response model is assessed with Dirichlet process mixture estimated Markov chain Monte Carlo method. Digital substantially exceeds impact investor experience, but both have significant positive trading volume. Findings obtained as flexible indicate that even latent endogenous factors makes an underlying contribution actions stock market.