Optimal Delegation and Limited Awareness, with an Application to Financial Intermediation
| Autor: | Nicola Pavoni, Sarah Auster |
|---|---|
| Rok vydání: | 2018 |
| Předmět: |
Finance
Delegation business.industry media_common.quotation_subject Financial intermediary ComputerApplications_COMPUTERSINOTHERSYSTEMS Investment (macroeconomics) Competition (economics) Intermediary Key (cryptography) ComputingMilieux_COMPUTERSANDSOCIETY Investment opportunities business media_common |
| Zdroj: | SSRN Electronic Journal. |
| ISSN: | 1556-5068 |
| DOI: | 10.2139/ssrn.3102831 |
| Popis: | We study the delegation problem between an investor and a financial intermediary, who not only has better information about the performance of the different investments but also has superior awareness of the available investment opportunities. The intermediary decides which of the feasible investments to reveal and which ones to hide. We show that the intermediary finds it optimal to make the investor aware of investment opportunities at the extremes, e.g. very risky and very safe projects, but leaves the investor unaware of intermediate options. We further study the role of competition between intermediaries and allow for investors with different levels of awareness to coexist in the same market. Self-reported data from customers in the Italian retail investment sector support the key predictions of the model: more knowledgeable investors receive richer menus that are nevertheless perceived to have less products at the extremes. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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