Attention and Biases: Evidence from Tax-Inattentive Investors

Justin Birru (), Fernando Chague, Rodrigo De-Losso () and Bruno Giovannetti ()
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Justin Birru: Fisher College of Business, The Ohio State University, Columbus, Ohio 43210
Rodrigo De-Losso: Department of Economics, University of Sao Paulo, Sao Paulo 05508-220, Brazil
Bruno Giovannetti: Sao Paulo School of Economics, Fundação Getulio Vargas, São Paulo 01332-000, Brazil

Management Science, 2024, vol. 70, issue 10, 7101-7119

Abstract: We first provide evidence of investor inattention to a very simple and well-known capital gains tax exemption in the Brazilian stock market. We then show that inattentive investors exhibit worse trading performance and stronger trading biases even after controlling for several investor-level variables, such as past trading experience. The evidence is consistent with inattention being one of the explanations for the prevalence of behavioral biases.

Keywords: retail investors; behavioral inattention; trading performance; behavioral biases; heuristics; financial mistakes (search for similar items in EconPapers)
Date: 2024
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http://dx.doi.org/10.1287/mnsc.2021.02516 (application/pdf)

Related works:
Working Paper: Attention and biases: evidence from tax-inattentive investors (2020)
Working Paper: Attention and Biases: Evidence from Tax-Inattentive Investors (2019)
Working Paper: Attention and Biases: Evidence from Tax-Inattentive Investors (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:70:y:2024:i:10:p:7101-7119

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