Economics Seminar Series with Eungik Lee

Eungik Lee, Assistant Professor, Indiana University will be presenting: 

Asset Redundancy, Complexity and Behavioral Attenuation

We examine how redundancy-driven complexity in financial assets shapes portfolio choices and whether social information corrects related biases. In experiments with 314 subjects, adding redundant assets consistently dampens sensitivity to relative prices “behavioral attenuation” even when computation is easy. Cognitive uncertainty, not computational load, explains much of this effect. Observing others’ accurate (but not biased) choices sharply reduces attenuation, especially for those with high cognitive uncertainty. The findings show how redundant complexity weakens market responsiveness and provide a choice-based measure of financial sophistication.