Effects of bonuses on diversification in delegated stock portfolio management

摘要: Abstract Our aim is to investigate whether bonuses make stock portfolio managers take higher risks by diversifying less. In two experiments with undergraduates role-playing being professional investors, we test a model implying that they initially anchor on 100% allocation one of options delivering the largest bonus payout, then adjust towards allocating equally much each option (maximal diversification) depending degree perceived uncertainty outcome. Experiment 1 find as expected when reduced, investment in preferred decreases such diversification increases. Diversification larger outcome made salient. 2 show majority herd strengthens effect for investing despite salient actual markets herding effects would result from investors similarly rewarded bonuses.