James J. Choi|David Laibson|Brigitte Madrian
Why Does the Law of One Price Fail? An Experiment on Index Mutual Funds
National Bureau of Economic Research|Yale University|National Bureau of Economic Research|Harvard University|National Bureau of Economic Research|Harvard University
abstract evaluate individuals invest highfee index funds experiments subjects allocate 10000 across four sampp 500 index funds rewarded portfolios subsequent return subjects overwhelmingly fail minimize fees reject hypothesis subjects buy highfee index funds bundled nonportfolio services search costs fees matter even eliminate costs fees minimized instead subjects place high weight annualized returns since inception fees paid decrease financial literacy interestingly subjects choose highfee funds sense making mistake