Attention and Biases: Evidence from Tax-inattentive Investors
Charles A. Dice Center Working Paper No. 2019-22
64 Pages Posted: 27 Sep 2019 Last revised: 26 Jul 2021
Date Written: July 14, 2021
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 tax-inattentive investors exhibit stronger behavioral biases and worse trading performance, even after controlling for several investor-level characteristics. The evidence is consistent with inattention being a common source of behavioral biases.
Keywords: retail investors, sub-optimal decisions, behavioral biases, financial mistakes
JEL Classification: C93, D83, D91, G11, G12, G40, G41, H31
Suggested Citation: Suggested Citation