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dc.contributor.authorChoi, James
dc.contributor.authorLaibson, David I.
dc.contributor.authorMadrian, Brigitte
dc.date.accessioned2011-01-25T20:21:28Z
dc.date.issued2010
dc.identifier.citationChoi, James, David Laibson, and Brigitte Madrian. 2010. Why does the law of one price fail? An experiment on index mutual funds. Review of Financial Studies 23(4): 1405-1432.en_US
dc.identifier.issn0893-9454en_US
dc.identifier.urihttp://nrs.harvard.edu/urn-3:HUL.InstRepos:4686775
dc.description.abstractWe evaluate why individuals invest in high-fee index funds. In our experiments, subjects each allocate $10,000 across four S&P 500 index funds and are rewarded for their portfolio’s subsequent return. Subjects overwhelmingly fail to minimize fees. We reject the hypothesis that subjects buy high-fee index funds because of bundled non-portfolio services. Search costs for fees matter, but even when we eliminate these costs, fees are not minimized. Instead, subjects place high weight on annualized returns since inception. Fees paid decrease with financial literacy. Interestingly, subjects who choose high-fee funds sense they are making a mistake.en_US
dc.description.sponsorshipEconomicsen_US
dc.language.isoen_USen_US
dc.publisherOxford University Pressen_US
dc.relation.isversionofdoi:10.1093/rfs/hhp097en_US
dash.licenseOAP
dc.titleWhy Does the Law of One Price Fail? An Experiment on Index Mutual Fundsen_US
dc.typeJournal Articleen_US
dc.description.versionAccepted Manuscripten_US
dc.relation.journalReview of Financial Studiesen_US
dash.depositing.authorLaibson, David I.
dc.date.available2011-01-25T20:21:28Z
dc.identifier.doi10.1093/rfs/hhp097*
dash.contributor.affiliatedLaibson, David
dash.contributor.affiliatedMadrian, Brigitte


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