Relative Performance Concerns, Attention Allocation and Complementarities in Information Acquisition

Zilong Niu

MPRA Paper from University Library of Munich, Germany

Abstract: This article studies how relative performance concerns affect institutional investors' information choices in the context of a multi-security market. I show that due to relative performance concerns and learning capacity constraint, institutional investors tend to acquire the same piece of information and the same asset as their peers. I also show that the change of distribution of capacity constraint can affect the price efficiency and cost of capital, but only through its effect on investors' average capacity constraint.

Keywords: relative performance concerns; attention allocation; complementarities in information acquisition (search for similar items in EconPapers)
JEL-codes: D82 G14 G23 (search for similar items in EconPapers)
Date: 2013-09-04, Revised 2013-11-02
New Economics Papers: this item is included in nep-cta and nep-hrm
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