Prospect theory in the field: Revealed preferences from mutual fund flows

Using mutual fund flow, we empirically test whether choices made by investors are consistent with preferences implied by prospect theory. Our findings support this hypothesis. When allocating capital to mutual funds, investors evaluate funds based on the past performance distribution and choose the ones that deliver the highest utility according to prospect theory. This predictive relation is robust when we control for a large set of known drivers of fund flows, alternative flow measures

• Publication year

  2026

• Venue

  Journal of Financial Economics

• Publication date

  2026-02-01

• Fields of study

  Not labeled

• Identifiers
  DOI 10.1016/j.jfineco.2025.104221
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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