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Attention and Biases: Evidence from Tax-Inattentive Investors

Justin Birru () and Fernando Chague, Rodrigo De-Losso, Bruno Giovannetti
Authors registered in the RePEc Author Service: Fernando Chague (), Bruno Cara Giovannetti () and Rodrigo De-Losso

No 2019_48, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: We provide evidence of investor inattention to a very simple and well-known tax exemption opportunity in the Brazilian stock market. Attentive and inattentive investors are similar along the dimensions of portfolio size and number of trades, but inattentive investors exhibit stronger behavioral biases and worse trading performance. The results hold even among high-activity investors who trade large volumes. The results are consistent with inattention being a common cause of behavioral biases.

Keywords: retail investors; behavioral inattention; stock-picking performance; behavioral biases; heuristics; bunching; financial mistakes (search for similar items in EconPapers)
JEL-codes: C93 D83 D91 G11 G12 G40 G41 H31 (search for similar items in EconPapers)
Date: 2019-12-11
New Economics Papers: this item is included in nep-ore
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Related works:
Working Paper: Attention and biases: evidence from tax-inattentive investors (2020) Downloads
Working Paper: Attention and Biases: Evidence from Tax-Inattentive Investors (2019) Downloads
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