Take your time: How delayed information and restricted decision opportunities improve belief formation in investment decisions

Kevin Trutmann, Steve Heinke and Jörg Rieskamp

Finance Research Letters, 2023, vol. 51, issue C

Abstract: Investors’ belief-updating is often influenced by factors such as the current investment position and whether information is subjectively favorable. Such motivated beliefs can lead to profit harming decisions. We argue that the degree of involvement with the development of an investment is a driver of such motivated beliefs. In a pre-registered experiment we aim to lower involvement by delaying information and committing participants to a portfolio. We show that this brings participants’ beliefs significantly closer to a Bayesian benchmark. Separating information processing and belief-updating from decisions thus appears as a promising and easy to implement intervention to improve financial decisions.

Keywords: Investing; Beliefs; Expectations; Information processing; Involvement; Intervention (search for similar items in EconPapers)
JEL-codes: D12 D83 D84 D91 G11 G41 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:51:y:2023:i:c:s1544612322006195

DOI: 10.1016/j.frl.2022.103442

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