Explanations determine the impact of information on financial investment judgments

✍ Scribed by Elizabeth J. Mulligan; Reid Hastie

• Publisher: John Wiley and Sons
• Year: 2005
• Tongue: English
• Weight: 133 KB
• Volume: 18
• Category: Article
• ISSN: 0894-3257
• DOI: 10.1002/bdm.491

✦ Synopsis

Previous research has shown that some types of judgments are influenced by the results of an explanation-seeking comprehension process. The present experiments investigated novice investors' stock price forecasts and investment decisions. Information presented in a narrative story order was hypothesized to promote the construction of a coherent mental representation that would affect how information was interpreted and subsequently used to predict stock price changes. The results showed that outcome information had a distinctively high impact, but only when the information was read in story order. These results imply that presentation order affects the mental representation of evidence relevant to the forecast, and the form of that mental representation moderates the impact of individual pieces of information on the ultimate judgment.