Google Search has long been the dominant search engine all over the world, with 93 percent of world market share in March 2019. The internet and online search engines today have become the cheapest and simplest way to obtain public information. The need for a more direct proxy for attention emerges. These include trading volume ( Barber and Odean, 2007 Chemmanur and Yan, 2019), extreme stock returns ( Barber and Odean, 2007) and stock prices ( Seasholes and Wu, 2007). The second group, potential effects of abnormal attention, is mostly extracted from trading statistics. The first group includes potential causes of abnormal attention: advertising expense ( Chemmanur and Yan, 2019 Grullon et al., 2004), media and news coverage ( Barber and Odean, 2007 Fang and Peress, 2009) and day of week ( Dellavigna and Pollet, 2009). The traditional indirect proxies can be divided into two groups. On the other hand, for different stocks, ones that attract more attention tend to see increased individual investor net buying ( Seasholes and Wu, 2007 Barber and Odean, 2007), increased trading volume and liquidity ( Grullon et al., 2004 Aouadi et al., 2013) and a hike-and-reverse period of returns ( Seasholes and Wu, 2007 Chemmanur and Yan, 2019).Īttention is a difficult factor to measure directly. Arrival of price-changing information, therefore, may see under-reaction, delaying trading activities and price correction ( Dellavigna and Pollet, 2009 Aouadi et al., 2013). As a result, for one specific stock, the pool of investors knowing about it is limited despite abundance of information ( Merton, 1987). It is difficult for individual investors to come up with an optimal choice by analyzing hundreds of stocks in full detail, therefore they have to reduce pool of options to stocks that attract them the most ( Barber and Odean, 2007). This argument of limited attention resource can be applied to the stock market. This abundance of information uses up attention and hence creates a “poverty of attention” ( Simon, 1971). Meanwhile, the relevant information load presented in everyday life easily outweighs the maximum load that a human being can react to ( Sims, 2003). But in reality human attention capacity is limited, and paying attention to information exhausts this capacity ( Kahneman, 1973). The full terms of this licence may be seen at Ĭlassical economic models assume immediate incorporation of new information into asset price, which implies instantaneous mental processing of any information load ( Da et al., 2011). Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Published in Journal of Economics and Development. Copyright © 2019, Vinh Xuan Bui and Hang Thu Nguyen License
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