The Display of Information and Household Investment Behavior

71 Pages Posted: 20 Apr 2017

See all articles by Maya Shaton

Maya Shaton

Board of Governors of the Federal Reserve System

Multiple version iconThere are 2 versions of this paper

Date Written: 2017-04

Abstract

I exploit a natural experiment to show that household investment decisions depend on the manner in which information is displayed. Israeli retirement funds were prohibited from displaying returns for periods shorter than twelve months. In this setting, the information displayed was altered but the accessible information remained the same. Using differences-in-differences design, I find that this change caused reduction in fund flow sensitivity to past returns, decline in trade volume, and increased asset allocation toward riskier funds. These results are consistent with models of limited attention and myopic loss aversion, and have important implications for households' accumulated wealth at retirement.

Keywords: Attention, Household Finance, Information Display, Myopic Loss Aversion, Salience

JEL Classification: D14, G02, G11

Suggested Citation

Shaton, Maya O, The Display of Information and Household Investment Behavior (2017-04). FEDS Working Paper No. 2017-043. Available at SSRN: https://ssrn.com/abstract=2952258 or http://dx.doi.org/10.17016/FEDS.2017.043

Maya O Shaton (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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