NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Does Aggregated Returns Disclosure Increase Portfolio Risk-Taking?

John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian

NBER Working Paper No. 16868
Issued in March 2011
NBER Program(s):   AG   AP

Many previous experiments have found that, consistent with myopic loss aversion, subjects invest more in risky assets if they are given less frequent feedback about their returns, are shown their aggregated portfolio-level (rather than separate asset-by-asset) returns, or are shown long-horizon (rather than one-year) historical asset class return distributions. We study the implications of these results for the effect of financial institutions’ returns disclosure policy on risk-taking. We find that aggregated returns disclosure treatments do not increase portfolio allocations to equity in an experiment where—in contrast to previous experiments—subjects invest in real mutual funds over the course of one year.

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This paper was revised on June 14, 2012

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Document Object Identifier (DOI): 10.3386/w16868

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