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Friday, May 18 • 8:00am - 8:50am
107-Does Changing How Fees Are Displayed Nudge Investors Away From Overpriced Index ETFs?: Evidence from Two Experiments

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Mark Lush, Angela Fontes, Ryan Murphy, Ray Sin - Index ETFs make up a substantial part of financial markets, with a market size that quadrupled since 2014. Some indistinguishable index funds have costs that differ from one another by up to a factor of 10. This price variance should not occur in the market, yet the anomaly persists and is increasing. We report the results from two incentivized experiments regarding this price anomaly using large nationally representative samples. The first experiment tested the degree to which fee framing (dollars vs. percent) modulates this price insensitivity.  It did not; there was a small and unexpected effect for preferences towards more expensive ETFs, consistent with a “price-as-quality signal.” A second incentivized experiment disentangles this causal mechanism from others.


Angela Fontes

Director, Behavioral and Economic Analysis and Decision-making unit, NORC at the University of Chicago
avatar for Mark Lush

Mark Lush

Behavioral Scientist, NORC

Friday May 18, 2018 8:00am - 8:50am
Island 1