Attention Utility: Evidence From Individual Investors
70 Pages Posted: 25 Feb 2020 Last revised: 11 Sep 2022
Date Written: September 10, 2022
We introduce attention utility, the hedonic pleasure or pain derived purely from paying attention to information, and differs from the news utility that arises from gaining new information. Two studies document selective attention to good news. The first study examines brokerage account login data to show that investors pay disproportionate attention to already-known positive information on their stocks. Through its effect on logins, this selective attention affects their trading activity. A second experimental study shows that investors are more likely to engage in a paid task that will involve attention to a prior investment if that investment has gained value.
Keywords: information utility, attention, investor behavior
JEL Classification: G40, G41, D14
Suggested Citation: Suggested Citation