| Authors |
Godker, Jiao, Smeets |
| Year |
2020 |
| Type |
Working Paper |
| Abstract |
How does memory shape individuals' financial decisions? We find experimental evidence of a self-serving memory bias. Subjects over-remember their own positive investment outcomes and under-remember negative ones. In contrast, subjects who did not invest but merely observed outcomes do not have this bias. The memory bias affects individual beliefs and decisions to re-invest. After investing, subjects form overly optimistic beliefs about their investment and re-invest even when doing so leads to a lower expected return. The memory bias is relevant for understanding how people learn from experiences in financial markets and has general implications for individual overconfidence and risk-taking. |
| Keywords |
Memory, selective recall, beliefs, self-image, investor behavior, experimental finance |
| URL |
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3348315 |
| Tags |
Experimental / Survey-Based Empirical |
Financing- and Investment Decisions (Individual) |
Social Transmission Biases
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