Tomorrow at 1.30 the Behavioural Science Centre is delighted to host an online talk from
Alycia
Chin<https://www.sec.gov/biography/chin-alycia> of the SEC. Teams link
here<https://teams.microsoft.com/l/meetup-join/19%3ameeting_ODI3NTE3Y2It…7d>.
Title: Beliefs about the Stock Market: Framing Effects in Subjective Expectations
Abstract
Financial models argue that investment decisions partially depend on expectations about
stock market returns. However, reported expectations – like any other survey responses –
may depend on the wording of the questions eliciting those expectations. In the current
research, we explore a relatively novel “probability” framing effect. Across 3 studies,
respondents appear to hold significantly different beliefs about future stock market
performance depending on whether they report the probability the stock market will go up
or down, with a difference in beliefs of up to 15 percentage points. The direction of the
difference is the opposite of most framing effects that display descriptions of
attributes, with participants who are asked about stock market declines appearing more
optimistic. We find this “probability” framing effect moderates with subjective numeracy
and financial literacy; however, not with survey experience, as differences in beliefs
persist over repeated survey administration for many months. We rule out several potential
explanations for this effect, and discuss implications of a “probability” framing effect
for future researchers and survey designers to consider.
Keywords: stock market, subjective expectations, framing effect
Prof. David Comerford
Economics
Division<https://www.stir.ac.uk/about/faculties/stirling-management-school/our-research/research-areas/economics/>,
Stirling Management School, University of Stirling, FK9 4LA.
(+44 / 0) 75-42-188-166
Director, Behavioural Science Centre<https://behsci.stir.ac.uk/>
Program Director, MSc Behavioural
Science<https://www.stir.ac.uk/courses/pg-taught/behavioural-science/>
Recent publications:
Bridger, E. K., Tufte-Hewett, A., & Comerford, D. A. (2023). Perceived health
inequalities: are the UK and US public aware of occupation-related health inequality, and
do they wish to see it reduced?. BMC Public Health, 23(1), 2326.
Comerford, D. A., Tufte-Hewett, A., & Bridger, E. K. (2023). Public preferences to
trade-off gains in total health for health equality: Discrepancies between an abstract
scenario versus the real-world scenario presented by COVID-19. Rationality and Society,
10434631231193599.
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