Journal of Political Economy Vol. 128 No. 5 2020
Information Aversion
Abstract
Information aversion—a preference-based fear of news flows—has rich implications for decisions involving information and risk-taking. It can explain key empirical patterns on how households pay attention to savings, namely, that investors observe their portfolios infrequently, particularly when stock prices are low or volatile. Receiving state-dependent alerts following sharp market downturns, such as during the financial crisis of 2008, improves welfare. Information-averse investors display an ostrich behavior: overhearing negative news prompts more inattention. Their fear of frequent news encourages them to hold undiversified portfolios.
- DOI
- 10.1086/705668
- Volume
- 128
- Issue
- 5
- Pages
- 1901-1939
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref