How Does Simplified Disclosure Affect Individuals' Mutual Fund Choices?
AbstractWe use an experiment to estimate the effect of the SEC’s Summary Prospectus, which simplifies mutual fund disclosure. Our subjects chose an equity portfolio and a bond portfolio. Subjects received either statutory prospectuses or Summary Prospectuses. We find no evidence that the Summary Prospectus affects portfolio choices. Our experiment sheds new light on the scope of investor confusion about sales loads. Even with a one-month investment horizon, subjects do not avoid loads. Subjects are either confused about loads, overlook them, or believe their chosen portfolio has an annualized log return that is 24 percentage points higher than the load-minimizing portfolio.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14859.
Date of creation: Apr 2009
Date of revision:
Note: AG AP PE
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Other versions of this item:
- John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian, 2011. "How Does Simplified Disclosure Affect Individuals’ Mutual Fund Choices?," NBER Chapters, in: Explorations in the Economics of Aging, pages 75-96 National Bureau of Economic Research, Inc.
- Beshears, John & Choi, James & Laibson, David & Madrian, Brigitte C., 2009. "How Does Simplified Disclosure Affect Individuals' Mutual Fund Choices?," Working Paper Series rwp09-016, Harvard University, John F. Kennedy School of Government.
- John Beshears & James Choi & David Laibson & Brigitte Madrian, 2009. "How Does Simplified Disclosure Affect Individuals' Mutual Fund Choices?," Yale School of Management Working Papers amz2547, Yale School of Management, revised 24 Jun 2009.
- C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
- D18 - Microeconomics - - Household Behavior - - - Consumer Protection
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-04-13 (All new papers)
- NEP-CBE-2009-04-13 (Cognitive & Behavioural Economics)
- NEP-EXP-2009-04-13 (Experimental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Yale School of Management Working Papers
amz2369, Yale School of Management, revised 05 May 2008.
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- James J Choi & David Laibson & Brigitte C Madrian, 2008. "Why Does the Law of One Price Fail? An Experiment on Index Mutual Funds," Levine's Working Paper Archive 122247000000002014, David K. Levine.
- James J. Choi & David Laibson & Brigitte C. Madrian, 2006. "Why Does the Law of One Price Fail? An Experiment on Index Mutual Funds," NBER Working Papers 12261, National Bureau of Economic Research, Inc.
- Choi, James & Madrian, Brigitte & Laibson, David I., 2010. "Why Does the Law of One Price Fail? An Experiment on Index Mutual Funds," Scholarly Articles 4686775, Harvard University Department of Economics.
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