Same Cues, Different Views: The Impact of Salient Financial Cues on Investment Decisions

Jolly, K. | Gürel, B. | Palan, S. | Badhani, K.

Published version

We examine how salient financial cues influence retail investors' evaluations of stocks. In an online experiment with 1,000 retail investors, we show participants one-year price charts of S&P~500 stocks. In treatment manipulations, we supplement this information with one of two financial cues: information about the 52-week high, and analyst buy recommendations. We elicit participants' incentivized predictions for the stock's return and risk over the subsequent year, and let them make an incentivized investment allocation to the stock and to cash. We also investigate whether participants are consciously aware of how strongly the cues influence their decisions.