Memory and Financial Decisions

Last registered on January 30, 2023

Pre-Trial

Trial Information

General Information

Title
Memory and Financial Decisions
RCT ID
AEARCTR-0010812
Initial registration date
January 27, 2023

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
January 30, 2023, 2:04 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Region
Region

Primary Investigator

Affiliation
LIUC University

Other Primary Investigator(s)

PI Affiliation
Bocconi

Additional Trial Information

Status
In development
Start date
2023-01-28
End date
2023-05-31
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
This research project aims to understand whether and how memories and personal experiences about the stock market influence invesment choices and attitudes towards uncertainty. In particular, here we want to study whether positive (negative) memories positively (negative) drives investment choices. Moreover, we further studer whether and how the provision of information interacts with previous personal experiences and memories.
External Link(s)

Registration Citation

Citation
Burro, Giovanni and Alessandro Castagnetti. 2023. "Memory and Financial Decisions ." AEA RCT Registry. January 30. https://doi.org/10.1257/rct.10812-1.0
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2023-01-28
Intervention End Date
2023-05-31

Primary Outcomes

Primary Outcomes (end points)
1. Investment Financial Decisions
Primary Outcomes (explanation)
The main outcome variable of this research is to assess the impact of the elicitation of memories and its interaction with information provision on investment choices.

Secondary Outcomes

Secondary Outcomes (end points)
1. Beliefs about the stock
2. Confidence of participants in their own choices
3. The heterogenous effect of memory and information provision in terms of financial literacy and demographics
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
At the outset of the experiment, participants will be asked to think of what sort of memories financial markets trigger in them (memories are not elicited in the control conditions). Following this, in some conditions participants will receive information about the stock they will be asked to invest. Thus, participants are asked to make a financial investment decision and are asked about their attitudes toward uncertainty. Finally, at the end of the experiment, participants will perform a simple financial literacy questionnaire and will be asked some demographic questions.
Experimental Design Details
At the outset of the experiment, participants are asked to recall their experiences regarding the stock market. Questions entail answers both in free form text as well as multiple choice questions. In the control conditions (IV, V, VI), this part is omitted and participants go straight to the steps described below.

Following this, participants will be randomly assigned to an experimental condition.

Condition I: No information is given.

Condition II: participants are given real prices and some information regarding the asset they later will be asked to invest or not.

Condition III: participants are given information on the asset they will later be asked to invest or not. Contrary to condition II, however, the information disclosed is vague and therefore it will be open for interpretation.

Condition IV: Participants are not only not given any information but they are also not primed to think about their existing memories. Therefore, for these participants no elicitation of memories is performed.

Condition V: same information as Condition II but no memory elicitation (like in Condition IV).

Condition VI: same information as Condition III but no memory elicitation (like in Condition IV).

After this, participants are given the current price of a specific stock (stock S, price P) and are asked to assess the probability with which they think that the stock will increase in price by X (P+X), will decrease in price by Y (P-Y), or will stay in the price range [P-Y;P+X] after 14 days. This elicitation is payoff relevant and is incentivized following Hossain and Okui (2013).

Thus, participants will be given an amount of money and are asked what percentage of it they want to keep and how much they want to invest in stock S. They win 2.5 times the amount invested if the price of the S after 14 days is above a given price PI. Otherwise, they lose the investment.

The next page of the experiment will ask participants how confident they are about their beliefs about the stock S price in the future, and that the amount invested in the stock will yield a positive return. Also, for those participants in conditions II-III-V-VI we will ask them whether they consider the information provided to them prior the investment decision useful or not.

In the last part of the experiment, participants will perform a simple financial literacy questionnaire.
This questionnaire consists of "Big Three" Financial literacy questions. Moreover, we ask participants their age and gender, whether they have received formal financial training and a self-assessment of their financial knowledege. Finally, we ask a general willingness to take risks question (Dohmen et al., 2011).
Randomization Method
Done by the computer software (Qualtrics).
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
N=1200
Sample size: planned number of observations
N=1200 However, if the funding is depleted sooner the total number of observations will be lower. In particular, priority will be given to the first 4 conditions.
Sample size (or number of clusters) by treatment arms
200 individuals by condition.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Considering a mean investment of 60% of the pot (18 units out of 30) as a baseline and a standard deviation of 0.8, the experiment is able to detect a change of around 13% at conventional levels (alpha=0.05, 1-beta=0.80)
IRB

Institutional Review Boards (IRBs)

IRB Name
Università commerciale Luigi Bocconi
IRB Approval Date
2023-01-26
IRB Approval Number
N/A

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials