Relative Performance Concerns, Attention Allocation and Complementarities in Information Acquisition

Niu, Zilong (2013): Relative Performance Concerns, Attention Allocation and Complementarities in Information Acquisition.

Abstract

This article studies how relative performance concerns affect institutional investors' information choices in the context of a multi-security market. I show that due to relative performance concerns and learning capacity constraint, institutional investors tend to acquire the same piece of information and the same asset as their peers. I also show that the change of distribution of capacity constraint can affect the price efficiency and cost of capital, but only through its effect on investors' average capacity constraint.

• Item Type: MPRA Paper
• Language: English
• Keywords: relative performance concerns, attention allocation, complementarities in information acquisition
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design; G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency ; Event Studies ; Insider Trading; G - Financial Economics > G2 - Financial Institutions and Services > G23 - Non-bank Financial Institutions ; Financial Instruments ; Institutional Investors

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