Alphabetic Bias, Investor Recognition, and Trading Behavior *

Jacobs, Heiko; Hillert, Alexander

doi:10.1093/rof/rfv060

Cited by 62 publications

(43 citation statements)

References 65 publications

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“…In the extant investments literature, alphabeticity bias has only been found in large choice sets, such as aggregate investments in the stock and mutual fund markets (Itzkowitz, Itzkowitz and Rothbort, ; Itzkowitz and Itzkowitz, ; Jacobs and Hillert, ). This is not surprising, as individuals who encounter greater numbers of choice options are more likely to use heuristics when making decisions (Ülkümen, Chakravarti and Morowitz, ).…”

Section: Resultsmentioning

confidence: 99%

“…Prior work shows that name fluency (Alter and Oppenheimer, ; Head, Smith and Wilson, ; Green and Jame, ), name memorability (Grullon, Kanatas and Weston, ), and alphabeticity (Itzkowitz, Itzkowitz and Rothbort, ; Itzkowitz and Itzkowitz, ) affect stock selection. In work that most seemingly relates to ours, Jacobs and Hillert () test the implications of alphabeticity bias on mutual fund flows. After omitting index funds and small mutual funds, they find that alphabeticity bias only affects the smaller mutual funds remaining in their sample.…”

Section: Introductionmentioning

confidence: 94%

“…While they observe aggregate fund flows as the result of all market participants’ investment decisions (more similar to the stock market), our study is the first to show that names influence individuals’ fund allocation decisions in the limited choice set of 401(k) plan menus. Importantly, to this point, alphabeticity bias has been found in the presence of a large choice set, such as stock investing (Itzkowitz, Itzkowitz and Rothbort, ; Itzkowitz and Itzkowitz, ) and mutual fund investing (Jacobs and Hillert, ). Alphabeticity bias effects in a relatively small mutual fund choice set where the cost of search is significantly lower, such as in 401(k) investment menus, had been an important yet unexplored issue in the extant literature.…”

Section: Introductionmentioning

confidence: 99%

“…And, because they are solicited more often, alumni with early alphabet names donate more than those with later alphabet names (Meer and Rosen, ). Stocks beginning with early alphabet letters have been found to have higher turnover, liquidity, and valuation than later alphabet stocks (Itzkowitz, Itzkowitz and Rothbort, ; Itzkowitz and Itzkowitz, ; Jacobs and Hillert, ).…”

mentioning

confidence: 99%

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Alphabeticity Bias in 401(k) Investing

Doellman

Itzkowitz

et al. 2019

The Financial Review

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Structural factors that cause irrational investment in defined contribution savings plans are of great concern. Using a proprietary database of 401(k) plans we show that alphabeticity—the order that fund names appear when listed in alphabetical order—significantly biases participants’ investment allocation decisions. While we show a larger impact as the number of funds in the plan increases, this bias is strong even when relatively few funds are available in the plan menu. Importantly, our findings suggest that a more strategic ordering of funds could result in favorable outcomes for participants.

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Section: Resultsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 94%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

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Alphabeticity Bias in 401(k) Investing

Doellman

Itzkowitz

et al. 2019

The Financial Review

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“…This order effect is certainly in line with research on marketing: products presented earlier exhibit higher probabilities of selection, as the aptly ordered article by Carney and Banaji (2012) observes. Even stocks with earlier names in the alphabet are more likely to be traded; see another aptly ordered paper by Jacobs and Hillert (2016), or Itzkowitz, Itzkowitz, and Rothbort (2016).…”

mentioning

confidence: 99%

Certified Random: A New Order for Coauthorship

Ray

Robson

2018

American Economic Review

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Our last names above appear in alphabetical order, but a coin was tossed to determine name placement. The symbol ® between our names is a signal that the names are in random order. Certified random order, randomization that is institutionally marked by a commonly understood symbol such as ®, is the topic of this paper.Alphabetical order is the norm for name order in joint research in economics. Table 1 reports the prevalence of this norm. Around 85 percent of two-author economics papers are written with the authors listed in alphabetical order.1 That percentage falls with more authors, possibly capturing the fear of et al. oblivion, or there could be research assistants involved.2 Compare this to the physical sciences, in which first authorship is given, presumably not without occasional disagreement, to the lead contributor, while other not-so-subtle signals such as lab leadership are sent through ancillary ordering conventions. Possibly the civility of the alphabetical 1 Certainly, alphabetical order is occasionally overturned (see Table 1 again) and when it is, it is a clear signal that the author who now appears first has done the bulk of the work. This option is central to the theory we develop.

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Name complexity, cognitive fluency, and asset prices

Chen-jun

Zhu

2019

Rev Financ Econ

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We document three interesting phenomena in the Chinese stock market related to the complexity of stock tickers: Companies with more complex stock tickers are (1) held by fewer investors; (2) witness a lower turnover; and (3) experience lower returns during post‐IPO period. The change‐in‐change analysis based on ticker‐changing events generates consistent results. Such results are strong among companies with a higher level of individual investor ownership and stronger information asymmetry. Our findings confirm and extend Green and Jame (Journal of Financial Economics, 2013, 109:813–834) and support that cognitive fluency and name recognition influence investor behavior and asset prices.

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Alphabetic Bias, Investor Recognition, and Trading Behavior *

Cited by 62 publications

References 65 publications

Alphabeticity Bias in 401(k) Investing

Alphabeticity Bias in 401(k) Investing

Certified Random: A New Order for Coauthorship

Name complexity, cognitive fluency, and asset prices

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