Attention Utility: Evidence From Individual Investors

Abstract

We introduce attention utility, the hedonic pleasure or pain derived purely from paying attention to information, and differs from the news utility that arises from gaining new information. Two studies document selective attention to good news. The first study examines brokerage account login data to show that investors pay disproportionate attention to already-known positive information on their stocks. Through its effect on logins, this selective attention affects their trading activity. A second experimental study shows that investors are more likely to engage in a paid task that will involve attention to a prior investment if that investment has gained value.

Keywords: information utility, attention, investor behavior

JEL Classification: G40, G41, D14