TY  - JOUR
AU  - Choi,James J.
AU  - Laibson,David
AU  - Madrian,Brigitte
AU  - Metrick,Andrew
TI  - Employees' Investment Decisions about Company Stock
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10228
PY  - 2004
Y2  - January 2004
UR  - http://www.nber.org/papers/w10228
L1  - http://www.nber.org/papers/w10228.pdf
N1  - Author contact info:
James J. Choi
Yale School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
E-Mail: james.choi@yale.edu

David Laibson
Department of Economics
Littauer M-12
Harvard University
Cambridge, MA 02138
Tel: 617/496-3402
Fax: 617/495-8570
E-Mail: dlaibson@gmail.com

Brigitte C. Madrian
John F. Kennedy School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617-495-8917
Fax: 617-496-5960
E-Mail: Brigitte_Madrian@Harvard.edu

Andrew Metrick
Yale School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520
Tel: 203/432-3069
E-Mail: metrick@yale.edu
AB  - We study the relationship between past returns on a company's stock and the level of investment in that stock by the participants in that company's 401(k) plan. Using data on 94,191 plan participants, we analyze several different decision points: the initial fraction of savings allocated to company stock, the changes in this fraction, and the reallocations of portfolio holdings across different asset classes. Like Benartzi (2001), we find that high past returns on company stock induce participants to allocate more of their contributions to company stock. We also find, however, that high returns on company stock have the opposite effect on reallocations of portfolio holdings, with high returns leading to shifts away from company stock and into other forms of equity. Overall, for company stock decisions, participants in our sample appear to be momentum investors when making contribution decisions and contrarian investors when making trading decisions.
ER  -