Experimental Design
The design consists of a main experiment and a follow-up survey.
The main experiment consists of four treatments: Baseline, Information, Statistical Reasoning, Statistical Reasoning-Alternative. These four treatments are assigned between subjects.
In each treatment, subjects report their subjective return beliefs on the stock market return over the next year and the next 10 years. In particular, subjects report the mean, 10th, and 90th percentiles of their subjective stock market return beliefs.
In Baseline, subjects do not receive any historical stock return information before reporting their beliefs.
In Information, subjects receive the annual return on S&P500 in the last 10 years before reporting their beliefs.
In Statistical Reasoning, subjects receive the annual return on S&P500 in the last 10 years, and to help with the processing of this information, they are trained on the basic statistical properties of the provided return information before reporting their beliefs.
Statistical Reasoning-Alternative is identical to the Statistical Reasoning treatment except that the provided return information on S&P500 is calculated accounting for inflation and without assuming dividend reinvestment.
After reporting their beliefs, subjects answer a set of questions on their stock ownership in and outside of their retirement accounts, their knowledge of stock market returns in the last 10 years, their financial literacy and statistical literacy, trust, reasons for participating in the stock market.
A follow-up survey is conducted after two weeks to test if the interventions are effective in reducing stock return ignorance and influencing investment behavior. For this purpose, we asked all participants their subjective return beliefs over the next year and next ten years without providing any historical stock return information irrespective of their treatment assignment in the main experiment.
Participants receive a fixed payment of 4 USD for the main experiment and 2 USD for the follow-up survey corresponding to an hourly rate of 24 USD.
The sample is representative of the US population and collected on Prolific.