Cognition and Perception Commons^™

Why Do Retail Investors Make Costly Mistakes? An Experiment On Mutual Fund Choice, Jill E. Fisch, Tess Wilkinson-Ryan

All Faculty Scholarship

There is mounting evidence that retail investors make predictable, costly investment mistakes, including underinvestment, naïve diversification, and payment of excessive fund fees. Over the past thirty-five years, however, participant-directed 401(k) plans have largely replaced professionally managed pension plans, requiring unsophisticated retail investors to navigate the financial markets themselves. Policy-makers have struggled with regulatory interventions designed to improve the quality of investment decisions without a clear understanding of the reasons for investor mistakes. Absent such an understanding, it is difficult to design effective regulatory responses.

This article offers a first step in understanding the investor decision-making process. We use an internet-based …

Situation Awareness And Maritime Traffic: Having Awareness Or Being In Control?, Fulko Van Westrenen, Gesa Praetorius

Gesa Praetorius

Situation awareness (SA) is generally seen as a mental representation of the system state, an objective measure of the ‘situation out there’. In this article, the authors make an argument that SA can only have a meaning in relation to the task of the user and characteristics of the system. This will be argued with the help of a specific environment: vessel traffic monitoring. The long-time constants and the complex constraints imposed on the ship require that the operator monitoring the traffic has a good SA: the operator must make long-term predictions about possible traffic developments. For this, being in …