Individuals investment in financial structured products from rational and behavioral choice perspectives

Moran Ofir, Zvi Wiener

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

8 Scopus citations


Structured products (SP) are synthetic investment instruments specially designed to meet specific needs that cannot be met by acquiring standard financial instruments available in the markets. We argue that many SP currently available to retail investors are designed to exploit several behavioral biases including: loss aversion, the disposition effects, herd behavior, the ostrich effect and the hindsight bias. We perform an experiment that examines investor decision-making in relation to SP investments. Our findings demonstrate that investors tend to be affected by these behavioral biases, which favor SP investments. Accordingly, regulation dealing specifically with SP may be warranted to improve investor protection. We offer a regulation that would compel issuers to reveal the effective fees they charge investors. In disclosing the effective fees, investors will be able to improve their decisions and will be able to evaluate the costs of their behavioral biases.

Original languageAmerican English
Title of host publicationBEHAVIORAL FINANCE
Subtitle of host publicationWHERE DO INVESTORS’ BIASES COME FROM?
PublisherWorld Scientific Publishing Co.
Number of pages33
ISBN (Electronic)9789813100091
StatePublished - 1 Jan 2016

Bibliographical note

Publisher Copyright:
© 2017 by World Scientific Publishing Co. Pte. Ltd.


  • Behavioral finance
  • Retail investors
  • Securities regulation
  • Sophistication
  • Structured products


Dive into the research topics of 'Individuals investment in financial structured products from rational and behavioral choice perspectives'. Together they form a unique fingerprint.

Cite this