Assessing Investor Biases Emerging from the Reading of Financial-Analyst Reports: Distortion of Information to Support Directional and Volatility-based Leanings
| Autor: | Simon J. Blanchard, Kurt A. Carlson |
|---|---|
| Rok vydání: | 2020 |
| Předmět: |
bepress|Social and Behavioral Sciences|Psychology
PsyArXiv|Social and Behavioral Sciences|Cognitive Psychology|Biases Framing and Heuristics Computer science media_common.quotation_subject PsyArXiv|Social and Behavioral Sciences|Consumer Psychology|Consumer Decision Making bepress|Social and Behavioral Sciences|Psychology|Cognitive Psychology PsyArXiv|Social and Behavioral Sciences Reading (process) Distortion PsyArXiv|Social and Behavioral Sciences|Cognitive Psychology|Judgment and Decision Making PsyArXiv|Social and Behavioral Sciences|Psychology other Econometrics bepress|Social and Behavioral Sciences PsyArXiv|Social and Behavioral Sciences|Cognitive Psychology PsyArXiv|Social and Behavioral Sciences|Consumer Psychology Volatility (finance) media_common |
| Popis: | Retail investors increasingly have access to both platforms that allow for sophisticated trading strategies - those profit in ways other than by selling an owned stock after price increase – and to financial-analyst reports upon which to build investment strategies. Building on the predecisional distortion literature, we study how consumers of financial-analyst reports bias information to support emerging preferences, both directional and volatility-based trades. We then present the results of two experiments conducted with retail investors with high financial literacy asked to develop investment strategies based financial-analyst reports. We find that those tend to who develop preferences toward bearish trades (i.e., profits from a stock price decrease) tend to bias new information more strongly those who develop preferences toward bullish trades (i.e., profits from a stock price increase). We also show that those leaning toward volatility-based trades (i.e., profit from either small or large price movements) tend to evaluate information in a less biased way and those leaning toward directional trades (bullish or bearish). |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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