Document Type

Article

Publication Date

7-2020

Abstract

We design a laboratory experiment to test for behavioral differences due to observation within a novel arena: investment games. We find that fund managers are more risk-averse when investors can observe their investment allocations. This effect is more pronounced when investors, in addition to observing the allocations, can also observe the investment outcomes. Interestingly, allowing investors to observe how their investment is allocated does not impact how much they invest. Last, when the outcome of the risky investment is public knowledge, disclosing managers’ allocations leads them to return more tokens to investors and to expropriate fewer tokens for themselves at the end of the game, ceteris paribus. We discuss potential causes of these effects.

Publication Title

Journal of Behavioral and Experimental Economics

ISSN

2214-8043

Publisher

Elsevier

Volume

88

Issue

101593

First Page

1

Last Page

11

Comments

Preprint version.

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