We argue that a common practice of evaluating portfolio managers relative to a benchmark has real effects. Benchmarking …

We propose a model of asset management in which benchmarking arises endogenously, and analyze its unintended welfare … prices. Benchmarking inflates asset prices and gives rise to crowded trades, thereby reducing the effectiveness of incentive … crowding, opts for less benchmarking and less incentive provision. We also show that asset management costs are lower with …

We propose a model of asset management in which benchmarking arises endogenously, and analyze its unintended welfare … asset prices. Benchmarking inflates asset prices and gives rise to crowded trades, thereby reducing the effectiveness of …, recognizing the crowding, opts for less benchmarking and less incentive provision. We also show that asset management costs are …

is zero for safe projects. Benchmarking also leads fundamental firm-level cash-flow correlations to rise. We review a …

. Benchmarking generates additional, inelastic demand for assets inside the benchmark. This leads to a “benchmark inclusion subsidy …

We argue that a common practice of evaluating portfolio managers relative to a benchmark has real effects. Benchmarking …