Beliefs About the Stock Market and Investment Choices: Evidence from a Field Experiment

Rüdiger Weber, Annika Weber, Christine Laudenbach and Johannes Wohlfart
Additional contact information
Rüdiger Weber: WU Vienna and VGSF
Annika Weber: Goethe University Frankfurt and SAFE
Christine Laudenbach: University of Bonn
Johannes Wohlfart: Department of Economics and CEBI, University of Copenhagen

No 21-17, CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI)

Abstract: We survey retail investors at an online bank to study how beliefs about the autocorrelation of aggregate stock returns shape investment decisions measured in administrative account data. Individuals' beliefs exhibit substantial heterogeneity and predict trading responses to market movements. We inform half of our respondents that, historically, the autocorrelation of returns was close to zero, which persistently changes their beliefs. The treatment significantly shifts respondents' equity purchases during the Covid-19 crash months later in the direction implied by the belief changes caused by the intervention. Our results provide causal evidence on the drivers of disagreement and trade in asset markets.

Keywords: Expectation Formation; Retail Investors; Trading; Field Experiment (search for similar items in EconPapers)
JEL-codes: D83 D84 D91 E71 G11 G12 G41 G50 (search for similar items in EconPapers)
Pages: 99
Date: 2021-11-23
New Economics Papers: this item is included in nep-cwa and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
https://www.econ.ku.dk/cebi/publikationer/working-papers/CEBI_WP_17-21.rev2.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kud:kucebi:2117

Access Statistics for this paper

More papers in CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI) Oester Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Hoffmann ().