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When cheaper is better : fee determination in the market for equity mutual funds


Gil-Bazo, Javier; Ruiz-Verdú, Pablo


Bitte beziehen Sie sich beim Zitieren dieses Dokumentes immer auf folgenden Persistent Identifier (PID):http://nbn-resolving.de/urn:nbn:de:0168-ssoar-263182

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Abstract In this paper, we develop a model of the market for equity mutual funds that captures three key characteristics of this market. First, there is competition among funds. Second, fund managers’ ability is not observed by investors before making their investment decisions. Third, some investors do not make optimal use of all available information. The main results of the paper are that (1) price competition is compatible with positive mark-ups in equilibrium, and (2) worse-performing funds set fees that are greater or equal to those set by better-performing funds. These predictions are supported by available empirical evidence.
Klassifikation Erhebungstechniken und Analysetechniken der Sozialwissenschaften; Volkswirtschaftstheorie
Methode empirisch
Freie Schlagwörter Mutual fund fees; Mutual fund performance; Product quality; Asymmetric information; Bounded rationality
Sprache Dokument Englisch
Publikationsjahr 2008
Seitenangabe S. 871-885
Zeitschriftentitel Journal of Economic Behavior & Organization, 67 (2008) 3-4
DOI http://dx.doi.org/10.1016/j.jebo.2007.04.003
Status Postprint; begutachtet (peer reviewed)
Lizenz PEER Licence Agreement (applicable only to documents from PEER project)