Toulouse School of Economics
21 allee de Brienne
Institutional Affiliation: Toulouse School of Economics
NBER Working Papers and Publications
|October 2017||Information Aversion|
with : w23958
The main features of households' attention to savings are rationalized by a model of information aversion, a preference-based fear of receiving flows of news. In line with the empirical evidence, information averse investors observe the value of their portfolios infrequently; inattention is more pronounced for more risk averse investors and in periods of low or volatile stock prices. The model also explains how changes in information frequencies affect risk-taking decisions, as observed in the field and the lab. Further, we find that receiving state-dependent alerts following sharp downturns improves welfare, suggesting a role for financial intermediaries as information managers.
Published: Marianne Andries & Valentin Haddad, 2020. "Information Aversion," Journal of Political Economy, vol 128(5), pages 1901-1939.