Journal of Behavioral and Experimental Finance

, volume 17 , pages 1-9

The investor in structured retail products: Advice driven or gambling oriented?

Margarida Abreu ¹

V.M.F. Mendes ^{2, 3}

Hide authors affiliations Show authors affiliations: 3 affiliations

ISEG-UL, Lisbon School of Economics and Management, Universidade de Lisboa, Portugal |

CEFAGE-EU—Center for Advanced Studies in Management and Economics of the Universidade de Évora, Portugal |

CMVM, Comissão do Mercado de Valores Mobiliários, Portugal |

Publication type: Journal Article

Publication date: 2018-03-01

Elsevier

Journal of Behavioral and Experimental Finance

scimago Q1

wos Q1

SJR: 1.049

CiteScore: 8.6

Impact factor: 4.7

ISSN: 22146350, 22146369

DOI: 10.1016/j.jbef.2017.12.001

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Finance

Abstract

Structured retail products (SRP) are one of the most visible faces of financial innovation and are becoming increasingly popular amongst retail investors. However, there is strong consensus that retail investors’ preference for structured products is difficult to explain using the standard rational theory, those products being in general sold at a significant premium. Studying the actual trading behavior of individual investors we provide evidence consistent with the view that SRP likely offer value to some informed investors compared to other products, and that SRP allow investors to access segments otherwise not available to them. Nonetheless, our results also suggest that the increasing popularity of SRP is deeply related to investors’ behavioral biases, particularly overconfidence and gambling.

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Abreu M., Mendes V. The investor in structured retail products: Advice driven or gambling oriented? // Journal of Behavioral and Experimental Finance. 2018. Vol. 17. pp. 1-9.

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Abreu M., Mendes V. The investor in structured retail products: Advice driven or gambling oriented? // Journal of Behavioral and Experimental Finance. 2018. Vol. 17. pp. 1-9.

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