An Experimental Examination of Heuristic-Based Decision Making in a Financial Setting

This paper reports the results of an experiment designed to examine information acquisition and evaluation in a financial setting, predicting mutual fund performance. We compare behavior across four distinct subject pools to provide insight into how training, knowledge, and experience affect decision making. We manipulate the decision environment by first increasing the time constraint and then increasing the decision cost. Although we find differences in behavior across subject pools, subjects' performance is similar. Outcomes are similar across the distinct subject pools, despite significant differences in financial education.