Attention Utility: Evidence From Individual Investors

53 Pages Posted: 25 Feb 2020 Last revised: 8 Mar 2020

See all articles by Edika Quispe-Torreblanca

Edika Quispe-Torreblanca

University of Oxford - Said Business School

John Gathergood

University of Nottingham - School of Economics

George Loewenstein

Carnegie Mellon University - Department of Social and Decision Sciences

Neil Stewart

Warwick Business School, University of Warwick

Multiple version iconThere are 2 versions of this paper

Date Written: January 28, 2020

Abstract

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

Quispe-Torreblanca, Edika and Gathergood, John and Loewenstein, George F. and Stewart, Neil, Attention Utility: Evidence From Individual Investors (January 28, 2020). Available at SSRN: https://ssrn.com/abstract=3527082 or http://dx.doi.org/10.2139/ssrn.3527082

Edika Quispe-Torreblanca

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

HOME PAGE: http://www.sbs.ox.ac.uk/about-us/people/edika-quispe-torreblanca

John Gathergood (Contact Author)

University of Nottingham - School of Economics ( email )

Sir Clive Granger Building
University Park
Nottingham, NG7 2RD
United Kingdom

HOME PAGE: http://https://sites.google.com/site/gathergoodjohn/

George F. Loewenstein

Carnegie Mellon University - Department of Social and Decision Sciences ( email )

Pittsburgh, PA 15213-3890
United States
412-268-8787 (Phone)
412-268-6938 (Fax)

Neil Stewart

Warwick Business School, University of Warwick ( email )

Gibbet Hill Road
Coventry, West Midlands CV4 8UW
United Kingdom

HOME PAGE: http://www.stewart.warwick.ac.uk

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