The same yet different: the effects of vividness in a laboratory asset market

In our experimental order-driven stock market, company news can be either high-quality and fact-based ('expert' news) or low-validity and survey-based ('social' news).Further, such messages can be provided in either a compact/matter-of-fact versus a florid/vivid form. We expect the latter to elicit a stronger interest and to boost volumes and prices. In the experiment, we find that the impact of vividness on order-submission activity is statistically and economically important. Across the experimental sessions, we also observe that the behavioral reluctance to sell exerts a powerful influence, with sell-side orders being fewer than buy-side ones, and less affected by vividness. Unexpectedly, the impact of expert news is not more marked than social news, and a confirmation bias in survey-based news does not provide the explanation. However, our result provide little cause for concern regarding market efficiency. The overlap between the buy and sell sides grows roughly proportionally with the total book size, implying there is no tangible net effect on executed order volume as a fraction of total book volume. Similarly, there is no statistically distinct effect on pricing. The main effect is on order volumes and traded volumes - the brokers' main objective as newsmongers, plausibly.