Fee structure and mutual fund choice: An experiment

Mikhail Anufriev, Te Bao, Angela Sutan and Jan Tuinstra

Journal of Economic Behavior & Organization, 2019, vol. 158, issue C, 449-474

Abstract: We present a laboratory experiment designed to investigate the effect of the fee structure on mutual fund choice. We find that subjects tend to ignore periodic and small operating expenses fees and base their decisions on gross, instead of net, returns. A fee in the form of a, much larger, front-end load leads to lock-in into one of the funds. It is used by some subjects as a commitment device, but exacerbates the decision errors of other subjects. Although past returns do not convey information about future returns, return chasing helps explain subjects’ behavior.

Keywords: Mutual fund choice; Fee structure; Experimental economics; Return chasing; Learning (search for similar items in EconPapers)
JEL-codes: C91 G11 G41 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268118303445
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Fee Structure and Mutual Fund Choice: An Experiment (2018)
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:eee:jeborg:v:158:y:2019:i:c:p:449-474

DOI: 10.1016/j.jebo.2018.12.013

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().