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.

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Media coverage: Harvard Business Manager

We examine nonpecuniary preferences across a broad set of corporate actions using a representative sample of the U.S. population. Our core findings, based on large-scale online surveys, are that (i) self-reported nonpecuniary concerns are large both for stock market investors and non-investors; (ii) concerns about the treatment of workers and CEO pay rank highest—higher than concerns about workforce diversity and fossil energy usage; (iii) moral universalism emerges as an important driver of nonpecuniary preferences. Combined, our findings provide new evidence on the importance of moral concerns as a key determinant of nonpecuniary preferences over corporate actions.

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Media coverage: ProMarket , Harvard Law School Forum 

We examine how and why context influences experiential learning, comparing professional- and private-context stock market experiences. We find opposing patterns: In professional contexts, a primacy effect causes underreaction to new experiences, allowing early experiences to dominate and entrench belief biases. In private contexts, a recency effect leads to overreaction and excessive fluctuation over time. To identify the causal effect of context and the underlying cognitive mechanisms, we combine (i) panel data on the dynamics of context-specific experiences and forecasts of finance professionals and (ii) experimental data on induced context-specific experiences and investment choices. We provide a dual-channeled explanation with implications for financial regulation and education.

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Media coverage: Neue Zürcher Zeitung, Euro Fondsxpress

We examine how to optimally design a robo-adviser for the purposes of  financial risk taking. 

We aim to quantify and understand the causal effect of a stock's ranking placement on investors' attention .