Chapter 12. Open-Ended Mutual Funds: Misframing, “Hot Hands,” and Obfuscation Games

Author: Shefrin, Hersh

Source: Beyond Greed and Fear, October 2002 , pp. 159-175(17)

Publisher: Oxford Scholarship Online Monographs

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Abstract:

Misframing and heuristic-driven bias combine to confuse investors about the relative contributions of skill and luck in fund performance. Investors invariably attribute excessive weight to skill, and consequently they tend to overweight the importance of an individual fund's track record. Moreover, open-end mutual funds companies tend to play to investors' weaknesses by inducing opaque frames.

Keywords: obfuscation games; heuristic-driven bias; representativeness; framing; Peter Lynch

Document Type: Research article

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