The Moderating Effect of Fund Assortment Size on the 1/N Heuristic.

Maureen Morrin, Rutgers University-Camden, USA
Susan Broniarczyk, University of Texas at Austin, USA
J. Jeffrey Inman, University of Pittsburgh, USA
In three studies, we explore the moderating effect of fund assortment size on the 1/n heuristic, or the tendency to allocate dollars evenly among the available set of investment options (Benartzi and Thaler 2001). When we decompose the 1/n heuristic into its two underlying behavioral dimensions, we find that increasing the fund assortment size decreases the tendency to invest in all available funds (the first dimension), but increases the tendency to spread one's dollars evenly among the chosen alternatives (the second dimension). The results help to reconcile discrepancies noted in previous research regarding asset allocation heuristics.
[ to cite ]:
Maureen Morrin, Susan Broniarczyk, and J. Jeffrey Inman (2010) ,"The Moderating Effect of Fund Assortment Size on the 1/N Heuristic. ", in NA - Advances in Consumer Research Volume 37, eds. Margaret C. Campbell, Jeff Inman, and Rik Pieters, Duluth, MN : Association for Consumer Research, Pages: 166-169 .