Beliefs About the Stock Market and Investment Choices: Evidence from a Field Experiment

Last registered on November 01, 2021


Trial Information

General Information

Beliefs About the Stock Market and Investment Choices: Evidence from a Field Experiment
Initial registration date
October 29, 2021

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
November 01, 2021, 12:36 PM EDT

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



Primary Investigator

University of Copenhagen

Other Primary Investigator(s)

PI Affiliation
University of Bonn
PI Affiliation
Goethe University Frankfurt

Additional Trial Information

Start date
End date
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
We study households' beliefs about the autocorrelation of annual returns of the aggregate stock market and the role of these beliefs in investment decisions. Based on a survey of retail investors at a German online bank, we document substantial heterogeneity in individuals' perceived autocorrelation, with a majority believing in mean reversion of returns. These beliefs predict how respondents adjust their portfolios in response to market movements, as measured in administrative account data. We provide a random half of our respondents with historical information on the low predictive power of realized returns for year-ahead returns. The intervention persistently reduces respondents' perceived autocorrelation, and shifts their expected year-ahead return accordingly. We find only minor adjustments of investment decisions in the short term. However, among those believing in mean reversion before the intervention, treated respondents display a significantly smaller increase in equity purchases in response to the COVID-19 stock market crash four to five months after the treatment. Our results suggest that heterogeneity in perceived models is a causal driver of trade in asset markets, and may more generally lead to differences in economic decisions across individuals.
External Link(s)

Registration Citation

Laudenbach, Christine, Annika Weber and Johannes Wohlfart. 2021. "Beliefs About the Stock Market and Investment Choices: Evidence from a Field Experiment." AEA RCT Registry. November 01.
Experimental Details


We conduct a survey of about 2,000 stockholders that are clients of a major German online bank. In our survey, we elicit respondents' beliefs about the historical autocorrelation of stock returns based on a new, individual-level measure. Specifically, we first ask respondents to think of six intervals of historical annual return realizations of the German stock market index (DAX) during the last 50 years. For each return interval, respondents are asked to provide an estimate of the average return of the DAX over the subsequent 12 months if the return over the previous 12 months fell into that interval. Subsequently, a random half of the respondents are informed about the actual historical conditional mean return over the following year for each of the six scenarios of returns over the previous year. Actual conditional mean returns in the six scenarios vary only narrowly around the unconditional historical average return of the DAX of 8.5 percent, illustrating the historical low degree of predictive power of recent returns for future returns at the annual frequency. In both the main survey and a follow-up survey conducted four weeks later, we then measure our respondents' posterior beliefs about the autocorrelation of stock returns and the return over the 12 months after the survey.
Intervention Start Date
Intervention End Date

Primary Outcomes

Primary Outcomes (end points)
Beliefs about the autocorrelation of stock returns, stock return expectations, trading behavior
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Our setup generates exogenous variation in individuals' beliefs about the autocorrelation of aggregate stock returns, which in turn allows us to examine whether subjective models of the stock market are a causal driver of people's return expectations. Moreover, by linking the treatment variation with administrative account data on trading decisions before and after the intervention, we can obtain causal evidence on the role of individuals' perceived models of the stock market in their investment decisions.
Experimental Design Details
Randomization Method
By computer.
Randomization Unit
Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters
2,083 individuals
Sample size: planned number of observations
2,083 individuals
Sample size (or number of clusters) by treatment arms
1,058 individuals in the control group; 1,025 individuals in the treatment group.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Institutional Review Boards (IRBs)

IRB Name
Goethe University Frankfurt
IRB Approval Date
IRB Approval Number


Post Trial Information

Study Withdrawal

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Is the intervention completed?
Intervention Completion Date
December 31, 2019, 12:00 +00:00
Data Collection Complete
Data Collection Completion Date
December 31, 2019, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
2,083 individuals
Was attrition correlated with treatment status?
Final Sample Size: Total Number of Observations
2,083 individuals
Final Sample Size (or Number of Clusters) by Treatment Arms
1,058 individuals in the control group; 1,025 individuals in the treatment group.
Data Publication

Data Publication

Is public data available?

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials