Information Aversion

Marianne Andries and Valentin Haddad

Journal of Political Economy, 2020, vol. 128, issue 5, 1901 - 1939

Abstract: Information aversion𠅊 preference-based fear of news flows—has rich implications for decisions involving information and risk-taking. It can explain key empirical patterns on how households pay attention to savings, namely, that investors observe their portfolios infrequently, particularly when stock prices are low or volatile. Receiving state-dependent alerts following sharp market downturns, such as during the financial crisis of 2008, improves welfare. Information-averse investors display an ostrich behavior: overhearing negative news prompts more inattention. Their fear of frequent news encourages them to hold undiversified portfolios.

Date: 2020
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Related works:
Working Paper: Information Aversion (2020)
Working Paper: Information Aversion (2017)
Working Paper: Information Aversion (2017)
Working Paper: Information Aversion (2014)
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