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| Author: | Glaser, M. (et al.) |
| Title: | Framing effects in stock market forecasts: The difference between asking for prices and asking for returns |
| Journal: | Review of finance
2007 : JUN, VOL. 11:2, p. 325-357 |
| Index terms: | financial markets stock markets securities forecasting prices rate of return |
| Language: | eng |
| Abstract: | This study argues and shows that the results in surveys analyzing return expectations (hereafter as: expts.) of financial market participants are easily influenced by the elicitation mode (as: eln-mode) of return expts. Surveys asking for future stock price levels are more likely to produce mean reverting expts. than surveys directly asking for future returns. A questionnaire study explicitly analyzing whether the specific eln-mode affects return expts. is performed. In this study, subjects were asked to state mean forecasts for seven time series. One half of the subjects was asked to state future price levels, the other group was directly asked for returns. A highly significant framing effect is found etc. The findings are consistent with behavioural theories of investor expectation formation based on the representativeness heuristic. |
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