Attention Utility: Evidence From Individual Investors
53 Pages Posted: 25 Feb 2020 Last revised: 8 Mar 2020
Date Written: January 28, 2020
Attention utility is the hedonic pleasure or pain derived purely from paying attention to information. Using data on brokerage account logins by individual investors, we show that individuals devote disproportionate attention to already-known positive information about the performance of individual stocks within their portfolios. This aversion to paying attention to unfavorable information, through its effect on logins, has consequences for trading activity; it reduces trading after recent losses and increases trading after recent gains. Attention utility is distinct from models of belief-based utility and information aversion (in which information not sought is not fully known), and implies that the pleasure and pain of attending to known information may be important for individual behavior.
Keywords: information utility, attention, investor behavior
JEL Classification: G40, G41, D14
Suggested Citation: Suggested Citation