Abstract
We use an experiment with a sample of professional investors to study the impact of text and emojis on investment proportion. We find that texts—provided as a supplementary information—have a statistically significant on investors’ decisions. However, the magnitude of the impact is too small (around 1%) to conclude that investor sentiment has an economically significant impact on investment decisions. We also find that emojis have no impact on investment decisions. Overall, our results are consistent with the efficient market hypothesis: in an experimental setting where the payoff and the probability of each decision are known, investment decisions of sophisticated traders are driven mostly by the type of asset, the level of risks, and the associated return of each investment and not by investor sentiment.
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Notes
- 1.
We use clustered standard errors to account for heteroskedasticity across participants.
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Acknowledgements
The authors gratefully acknowledge the fundings of the Sorbonne Economics Centre (https://centredeconomiesorbonne.cnrs.fr/en/home/) and of the Fédération de Recherche pour les Sciences Sociales du Comportement Humain (https://s2ch.cnrs.fr/). The authors thank the members of the audience at the Centre d’Economie de la Sorbonne, at the Laboratoire d’Economie d’Orléans of the University of Orléans and at Investor’s Emotions and Asset Pricing Meeting held the IAE Lille University School of Management and at the GDRE at the University of Strasbourg for the valuable comments.
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Boulu-Reshef, B., Bruneau, C., Nicolas, M., Renault, T. (2023). An Experimental Analysis of Investor Sentiment. In: Bourghelle, D., Grandin, P., Jawadi, F., Rozin, P. (eds) Behavioral Finance and Asset Prices. Contributions to Finance and Accounting. Springer, Cham. https://doi.org/10.1007/978-3-031-24486-5_6
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