Attention and biases: evidence from tax-inattentive investors
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2020-02
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Using bunching induced by a policy notch for identfication, wefirst provide evidence of investor inattention to a very simple and well-known capital-gains tax exemption in the Brazilian stock market. We then show that tax-inattentive investors exhibit stronger behavioral biases and worse trading performance, even after controlling for several investor-level variables such as trading experience, observed performance, financial sophistication, age, and occupation. This is consistent with inattention being a common source of behavioral biases.