The Display of Information and Household Investment Behavior

Maya Shaton

No 2017-043, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: I exploit a natural experiment to show that household investment decisions depend on the manner in which information is displayed. Israeli retirement funds were prohibited from displaying returns for periods shorter than twelve months. In this setting, the information displayed was altered but the accessible information remained the same. Using differences-in-differences design, I find that this change caused reduction in fund flow sensitivity to past returns, decline in trade volume, and increased asset allocation toward riskier funds. These results are consistent with models of limited attention and myopic loss aversion, and have important implications for households' accumulated wealth at retirement.

Keywords: Attention; Household Finance; Information Display; Myopic Loss Aversion; Salience (search for similar items in EconPapers)
JEL-codes: D14 G02 G11 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2017-04
New Economics Papers: this item is included in nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://www.federalreserve.gov/econres/feds/files/2017043pap.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2017-43

DOI: 10.17016/FEDS.2017.043

Access Statistics for this paper

More papers in Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().