Echo Chambers

J. Anthony Cookson, Joseph Engelberg and William Mullins
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William Mullins: UC San Diego

No n2q9h, SocArXiv from Center for Open Science

Abstract: We find evidence of selective exposure to confirmatory information among 300,000 users on the investor social network StockTwits. Self-described bulls are 5 times more likely to follow a user with a bullish view of the same stock than self-described bears. This tendency is strong even among professional investors and is more pronounced on earnings announcement days. Placing oneself in an information “echo chamber” generates significant differences in the newsfeeds of bulls and bears: over a 50-day period, a bull will see 70 more bullish messages and 15 fewer bearish messages than a bear over the same period. Selective exposure creates “information silos” in which the diversity of received signals is high across users' newsfeeds but is low within users' newsfeeds. Finally, we show that this siloing of information is positively related to trading volume.

Date: 2020-05-16
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:n2q9h

DOI: 10.31219/osf.io/n2q9h

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