Optimal portfolio choice model and empirical analysis based on representation bias.

As a mental characteristic, vertical representation bias is introduced to portfolio choice model, to research its influence to investors' portfolio decision. This paper proposes Representation Return concept, and gives an investors' utility function of two variables -- final return and Excess Representation Return, from the principle of expected utility maximization. Then establishes optimal portfolio model based on vertical representation bias, and give an empirical analysis showing that the model can obtain efficient frontier of investment portfolio. [ABSTRACT FROM AUTHOR]