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Bio: Maya Shaton

Maya Shaton is an economist at the Federal Reserve Board of Governors. She graduated in 2015 from the University Of Chicago Booth School Of Business with a Ph.D in finance and an M.B.A. Her research interests are: household finance, corporate finance, behavioral finance, and law and finance. Maya received an M.A. in Financial Economics, a B.A. in Economics and an LL.B. in Law from the Hebrew University Of Jerusalem. Prior to joining the Ph.D. program at Booth, she worked at the Israeli law firm S. Horowitz in the International Transactions Department.

Abstract

I show that household investment decisions depend on the manner in which information is displayed by exploiting a regulatory change which prohibited the display of past returns for any period shorter than twelve months. In this setting, the information displayed was altered but the information households could access remained the same. Using a differences-indifferences design, I find that the shock to information display caused a reduction in the sensitivity of fund flows to short-term returns, a decline in overall trade volume, and increased asset allocation toward riskier funds. These results are consistent with models of limited attention and myopic loss aversion. To further explore the concept of salience, I propose a distinction between relative and absolute salience and find evidence consistent with the latter. Overall, my findings indicate that small changes in the manner in which past performance information is displayed can have large effects on household investment behavior and potentially influence households’ accumulated wealth at retirement.