The demand for structured products: an experimental approach

Adriana Breaban (), Juan Carlos Matallín-Sáez (), Iván Barreda-Tarrazona () and Mª Rosario Balaguer-Franch ()
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Juan Carlos Matallín-Sáez: Finance and Accounting Dept., Universitat Jaume I, Castellón, Spain
Mª Rosario Balaguer-Franch: Finance and Accounting Dept., Universitat Jaume I, Castellón, Spain

No 2012/15, Working Papers from Economics Department, Universitat Jaume I, Castellón (Spain)

Abstract: Structured investment funds showed an important growth in the mutual fund industry. We analyze this type of fund’s demand using the experimental methodology which gives us perfect control over the characteristics of the funds and the information provided to the investor. Different types of structured guaranteed funds, with fixed combinations of secured and additional benefits, are sequentially offered to university students who act as investors. Subjects also have the alternative possibility to buy bonds. Our results show that information available to investors, and particularly the order in which this information is presented, generates significant biases in their decision making which can have both positive and negative consequences on their financial behavior. In fact, when the investment alternatives are made easier to compare, too good to be true investment offers get more easily spotted, whereas funds whose performance shows an apparently positive trend result overvalued in comparison to bonds.

Keywords: investor behavior; experiment; guaranteed investment fund. (search for similar items in EconPapers)
JEL-codes: C91 G02 G23 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2012
New Economics Papers: this item is included in nep-exp
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