Higher-Order Beliefs and Risky Asset Holdings

Last registered on July 08, 2024
View Trial History

Pre-Trial

Trial Information

General Information

Title
Higher-Order Beliefs and Risky Asset Holdings
RCT ID
AEARCTR-0013929
Initial registration date
July 02, 2024

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
July 08, 2024, 1:13 PM EDT

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

Locations

Country
United States of America
Region

Primary Investigator

Name
Xiao Yin
Affiliation
UCL
Contact Primary Investigator

Other Primary Investigator(s)

Additional Trial Information

Status
Completed
Start date
2023-11-07
End date
2024-03-01
Keywords
Finance & Microfinance
Additional Keywords
JEL code(s)
G11, G12, G51, D84, C83
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
We combine a customized survey and randomized controlled trial (RCT) to study the effect of higher-order beliefs on U.S. retail investors’ portfolio allocations. We find that investors’ higher-order beliefs about stock market returns are correlated with but distinct from their first-order beliefs. Furthermore, the differences between the two vary systematically according to investor characteristics. We use information treatments in the RCT to create exogenous differential variations in first- and higher-order beliefs. We find that an exogenous increase in first-order beliefs increases the portfolio share allocated to the stock market (risky assets), while an exogenous increase in higher-order beliefs reduces it.
External Link(s)

Registration Citation

Citation
Yin, Xiao. 2024. "Higher-Order Beliefs and Risky Asset Holdings." AEA RCT Registry. July 08. https://doi.org/10.1257/rct.13929-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Provided two groups of individuals with information about the S&P 500 index return.

Intervention (Hidden)
Intervention Start Date
2023-11-07
Intervention End Date
2023-11-14

Primary Outcomes

Primary Outcomes (end points)
Beliefs about the S&P 500 payoff in Sept 2024. Beliefs about other investors' beliefs about the S&P 500 payoff at Sept 2024. Risky asset holding in Feb 2024.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
1. At the beginning of November 2023, we selected a pool of participants from Prolific. Participants had to be stock investors in the US and full-time or part-time employees.

2. We randomly split participants into three groups: control, treatment 1, and treatment 2.

3. We sent surveys to the control group, eliciting their beliefs about future stock market payoffs.

4. We then collected surveys from the control group and sent surveys to the treatment groups

5. For those in the treatment groups, we provided information about S&P 500 index payoffs.

6. At the beginning of February 2024, we sent a follow-up survey to the same participants.
Experimental Design Details
Randomization Method
Randomization was done with a randomizer on Prolific.
Randomization Unit
Randomization is done at the individual level.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
1
Sample size: planned number of observations
4500
Sample size (or number of clusters) by treatment arms
1128 control, 1128 treatment group 1, 1116 treatment group 2.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
UC Berkeley
IRB Approval Date
2023-10-10
IRB Approval Number
2023-08-16622
Analysis Plan

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