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  2. ASSA Annual Meeting
  3. 2026
  4. Program
  5. Drivers of Household Portfolio Choice
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Drivers of Household Portfolio Choice

Paper Session

Saturday, Jan. 3, 2026 2:30 PM - 4:30 PM (EST)

Loews Philadelphia Hotel, Regency Ballroom C1
Hosted By: American Finance Association
  • Chair: Scott R. Baker, Northwestern University

The Impact of Finfluencers on Retail Investment

Isaiah Hull
,
CogniFrame
Yingjie Qi
,
Copenhagen Business School

Abstract

We study whether, and to what extent, financial influencers (“finfluencers”) shape retail investor behavior using a decade of daily trading data from four Nordic countries. Investors are more likely to subscribe to finfluencers with strong past performance, high trading activity, the same language or country of residence, and male gender. To establish a causal link between finfluencers and followers’ investment decisions, we exploit a unique platform feature that randomly assigns some finfluencers to new investors. Finfluencers have a sizable impact on followers’ portfolios, with stronger effects for sales than purchases and for finfluencers who command large followings, occupy central network positions, or are highly active in discussions. Influence is amplified among women and among investors who follow fewer finfluencers. Overall, our evidence shows that finfluencers are important drivers of retail trading and portfolio choice, underscoring the growing role of social dynamics in financial markets.

Smaller than We Thought? The Effect of Automatic Savings Policies

James Choi
,
Yale University
David Laibson
,
Harvard University
Jordan Cammarota
,
University of California-Berkeley
Richard Lombardo
,
Harvard University
John Beshears
,
Harvard University

Abstract

Medium- and long-run dynamics undermine the effect of automatic enrollment and default savings-rate auto-escalation on retirement savings. Our analysis of 401(k) plans incorporates the facts that employees frequently leave firms (often before matching contributions have fully vested), a large percentage of balances are withdrawn upon employment separation, and many employees opt out of default auto-escalation. Across nine natural experiments, steady-state saving rates increase by 0.6% of income due to automatic enrollment and 0.2% of income due to default auto-escalation. Only 43% of employees in 21 401(k) plans in our data with default auto-escalation actually escalate on their first auto-escalation date.

When Human Meet Algorithm: the Adoption and Impact of Retail Algorithmic Trading

Pulak Ghosh
,
Indian Institute of Management-Bangalore
You Li
,
Macau University of Science and Technology
Jian Zhang
,
The University of Hong Kong

Abstract

"We study the adoption and economic impact of artificial intelligence technology by
retail investors in a developing economy. We document new facts to characterize the
human-algorithm interaction in the context of retail investor trading using administra-
tive account-level data of all individual investors from National Stock Exchange of India,
the world’s 8th largest stock exchange. While the retail algorithmic trading market is
dominated by male investors, the relative share of female algorithmic participation in-
creases steadily from 5% in 2012 to 10% in 2019. We find that algorithmic trades by
male-young investors take up most of the overall increase in recent years and are highly
procyclical to the market condition. Investors adapting to algorithmic trading experience
better performance as measured by higher market-adjusted return and Sharpe ratio. The
benefit is greater for less wealthy investors and those who are holding less diversified
portfolio or exhibit more behavioral bias ex ante. We find evidence that improved per-
formance is likely due to enhanced trading responsiveness to new market information
and reduced behavioral biases. Consistent with “learning by algorithmic trading”, un-
profitable algorithmic traders are more likely to quit than profitable traders. Algorithmic trade size is also sensitive to past performance and retail algorithmic investors initially execute very small trades during the first few trials and increase trade size significantly after profitable trades."

Firm Shocks and Retirement Savings

Clemens Sialm
,
University of Texas at Austin
Hanjiang Zhang
,
Washington State University

Abstract

We investigate whether firm-level idiosyncratic shocks affect retirement savings in defined contribution pension plans. We find that retirement account contributions by both employees and employers increase after an improvement in idiosyncratic firm performance and decline after an increase in idiosyncratic firm uncertainty. Retirement contributions by employers are more sensitive to idiosyncratic shocks than employee contributions. However, even if firms do not adjust their matching rates, employees adjust their retirement contributions to idiosyncratic firm shocks. Our results indicate that firms share their risk exposure with their employees and that short-term stock price fluctuations affect long-term retirement savings.

Discussant(s)
Anthony DeFusco
,
University of Wisconsin-Madison
Bronson Argyle
,
Brigham Young University
Varun Sharma
,
Indiana University
Allison Cole
,
Arizona State University
JEL Classifications
  • G1 - General Financial Markets