Presenting return charts in investment decisions

Christoph Huber and Julia Rose

Journal of Behavioral and Experimental Finance, 2025, vol. 46, issue C

Abstract: An investment’s performance is often represented through charts, which are key components in making informed investment decisions but allow for discretion in how the information is presented. In a controlled, incentivized experiment that models an advisor–client setting, we specifically study the discretion in the charts’ vertical axis scale. Our findings reveal that advisors tend to present positive returns on a comparatively narrow scale – thereby enhancing the size of the return bars – while no distinct pattern is observed for negative returns. Advisors’ scaling choices do not vary with different incentive schemes. For positive returns, chosen scales are positively related to advisors’ forecasts. We therefore find no evidence that advisors use the chart’s axis scale to visually emphasize or de-emphasize investment performance in a strategic manner. Additionally, investors’ decisions and forecasts are not affected by different scales. This study extends the existing literature by exploring an interactive advisor–client setting and contributes to our understanding of how return information is presented in investment decisions.

Keywords: Investment decision-making; Financial advice; Financial regulation; Deception; Experimental finance (search for similar items in EconPapers)
JEL-codes: C91 D14 D18 G11 G41 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:46:y:2025:i:c:s2214635025000218

DOI: 10.1016/j.jbef.2025.101040

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