Munich Personal RePEc Archive

Relative Performance Concerns, Attention Allocation and Complementarities in Information Acquisition

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

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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.

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