The paper by Stijn Van Nieuwerburgh and Laura Veldkamp explores the phenomenon of home bias in investment, where investors tend to favor domestic assets over foreign ones. The authors argue that this bias is not due to restrictions on international capital flows but rather to information asymmetry, where home investors have more accurate information about domestic firms or economic conditions. They model investors who can choose what information to learn before investing, finding that even when home investors can learn what foreigners know, they choose not to, as learning amplifies information asymmetry. The model matches patterns of local and industry bias, foreign investments, portfolio out-performance, and asset prices. The authors also propose new avenues for empirical research to test their model's predictions. The paper concludes by discussing how learning can magnify home bias and connecting the theory to various empirical facts, such as analyst forecasts, portfolio patterns, and excess portfolio returns.The paper by Stijn Van Nieuwerburgh and Laura Veldkamp explores the phenomenon of home bias in investment, where investors tend to favor domestic assets over foreign ones. The authors argue that this bias is not due to restrictions on international capital flows but rather to information asymmetry, where home investors have more accurate information about domestic firms or economic conditions. They model investors who can choose what information to learn before investing, finding that even when home investors can learn what foreigners know, they choose not to, as learning amplifies information asymmetry. The model matches patterns of local and industry bias, foreign investments, portfolio out-performance, and asset prices. The authors also propose new avenues for empirical research to test their model's predictions. The paper concludes by discussing how learning can magnify home bias and connecting the theory to various empirical facts, such as analyst forecasts, portfolio patterns, and excess portfolio returns.