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Investor Beliefs and Expectation Formation

Author

Listed:
  • Stefano Giglio
  • Matteo Maggiori
  • Joachim Rillo
  • Johannes Stroebel
  • Stephen P. Utkus
  • Xiao Xu

Abstract

This article reviews the literature that uses survey data to study expectation formation among investors. We begin by outlining methods for eliciting investor beliefs and summarizing key empirical patterns documented in recent work. Highlighting the persistent cross-sectional heterogeneity in expectations, we then review evidence on the determinants of beliefs, including a new analysis of belief reactions to the tariff announcement in April 2025. Next, we examine how expectations shape financial decision-making, emphasizing the systematic but muted sensitivity of outcomes to belief changes. We conclude by pointing to promising directions for future research on belief measurement, the determinants of expectations, and their implications for policymakers.

Suggested Citation

  • Stefano Giglio & Matteo Maggiori & Joachim Rillo & Johannes Stroebel & Stephen P. Utkus & Xiao Xu, 2025. "Investor Beliefs and Expectation Formation," NBER Working Papers 34446, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34446
    Note: AP CF EFG
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    Cited by:

    1. Giuseppe Matera, 2025. "Corporate Earnings Calls and Analyst Beliefs," Papers 2511.15214, arXiv.org, revised Nov 2025.

    More about this item

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G5 - Financial Economics - - Household Finance

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