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

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

The stock index “point” is a focal component of financial news reports. Though many reports draw attention to point changes in major indices, few people realize that the value of a stock index “point” changes frequently. We call this perceptual phenomenon “point blindness.” We examine causes of point blindness and then propose alternate ways of reporting stock market information to counter it. The alternatives are easy to implement and can help citizens draw important inferences about stock values. An experiment shows that alternate modes of presentation have significant effects on public perceptions of the stock market.

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File URL: http://mpra.ub.uni-muenchen.de/8191/1/MPRA_paper_8191.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8191.

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Date of creation: 24 Mar 2008
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Handle: RePEc:pra:mprapa:8191
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  8. Karen K. Lewis, 1999. "Trying to Explain Home Bias in Equities and Consumption," Journal of Economic Literature, American Economic Association, vol. 37(2), pages 571-608, June.
  9. Xavier Gabaix & David Laibson & Guillermo Moloche & Stephen Weinberg, 2006. "Costly Information Acquisition: Experimental Analysis of a Boundedly Rational Model," American Economic Review, American Economic Association, vol. 96(4), pages 1043-1068, September.
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