Mediating Investor Attention

Terrance Odean

Professor Odean will discuss how media coverage, psychological biases, and decision heuristics affect the trading of individual investors. Analyzing the trading records of hundreds of thousands of investors, Odean finds that individual investors tend to trade too frequently, hold onto their losing investments, and buy stocks that are in the news. Mutual fund investors pay too much attention to past returns and too little to expenses. And investors’ excitement contributes to asset-pricing bubbles. Excessive trading and return chasing with too little attention to fees materially lower investment returns and welfare.


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