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Judging a book by its cover: Fund investors’ physical attractiveness stereotypes and investor behavior

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Listed:
  • Feng, Guo
  • Zhuo, Jiayi
  • Hou, Fangzhuo
  • Yan, Shuo

Abstract

This paper documents that fund investors’ behavior is biased by the physical attractiveness stereotypes that they hold about fund managers. In an experimental setting, we find that although there is no information about highly attractive fund managers outperform their peers, respondents still perceive highly attractive managers to possess superior management skills and are willing to allocate more money to their managed funds. We further find that provision of information in contrast to the assumptions associated with physical attractiveness stereotypes diminishes the bias in investor behavior. When less attractive managers have historical returns that are 4% higher than more attractive managers, investors’ preference for attractive faces is overridden. Empirical evidence obtained using fund market data is consistent with our experimental results.

Suggested Citation

  • Feng, Guo & Zhuo, Jiayi & Hou, Fangzhuo & Yan, Shuo, 2024. "Judging a book by its cover: Fund investors’ physical attractiveness stereotypes and investor behavior," Journal of Behavioral and Experimental Finance, Elsevier, vol. 42(C).
  • Handle: RePEc:eee:beexfi:v:42:y:2024:i:c:s2214635024000236
    DOI: 10.1016/j.jbef.2024.100908
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    References listed on IDEAS

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    More about this item

    Keywords

    Face information; Machine learning; Stereotypes; Beauty premium;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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