Misperceived Returns to Active Investing

Arbeitspapier

We conduct field experiments with retail investors recruited from a social trading platform. In our main experiment, we first elicit beliefs about the returns to active investing. We then generate exogenous variation in beliefs by providing treated respondents with information about index funds historically outperforming active funds. Treated respondents are 17.8 percentage points more likely to believe that index funds will outperform active funds in the future. Four months after the experiment, we collect administrative data on portfolio allocations. Treated respondents increase the index fund shares of their portfolios by 4.4 percentage points (37.7%) relative to the control group.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 10257

Classification and Topics

• Classification: Wirtschaft ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
• Subject: household finance ; retail investors ; portfolio allocations ; field experiment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Haaland, Ingar ; Næss, Ole-Andreas Elvik
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/271901
• Last update: 10.03.2025, 11:45 AM CET