Séminaire de finance comportementale avec le Dr Zwetelina Iliewa, Centre for European Economic Research (ZEW), Mannheim

Abstract : Prices and returns are alternative ways to present information and to elicit expectations in financial markets. But do investors make sense of prices and returns in the same way? This paper presents three studies with subjects of varying expertise, with various amounts of information and with different incentive schemes. The results are consistent across all studies: Asking subjects to forecast returns as opposed to prices results in higher expectations, whereas showing them return charts as opposed to price charts results in lower expectations. Experience is not a useful remedy but Cognitive Reflection mitigates the impact of format changes.

• Dr Zwetelina Iliewa's profile