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How “Point Blindness” Dilutes the Value of Stock Market Reports

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Author Info
Lupia, Arthur
Krupnikov, Yanna
Levine, Adam Seth
Grafstrom, Cassandra
MacMillan, William
McGovern, Erin

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Abstract

The stock index “point” is a focal component of financial news reports. While much attention is paid to changes in stock index point totals, few people realize that the value of a stock index “point” varies (and has recently declined). We call this perceptual phenomenon “point blindness” and explain its threat to investors. Simple changes in media presentations of stock index information can counter point blindness. These changes are easy to implement and can help audiences make better financial decisions. An experiment on over 2000 participants shows such changes significantly altering their perceptions of the stock market.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9604.

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Date of creation: 15 Jul 2008
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Handle: RePEc:pra:mprapa:9604

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Related research
Keywords: personal finance; money illusion; behavioral finance; behavioral economics; communication; currencies;

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Find related papers by JEL classification:
G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information

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