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Real-life investors’ memory recall bias: A lab-in-the-field experiment

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  • Li, King King
  • Rong, Kang

Abstract

We conduct a lab-in-the field experiment to investigate the memory recall bias of real-life investors who are asked to recall their best performing stock (BPS) and worst performing stock (WPS). We have four main findings. First, investors are more likely to forget WPS than BPS. The proportion of investors who forget WPS and remember BPS is higher than that of those who forget BPS and remember WPS. Second, less experienced investors are more likely to forget WPS than more experienced investors. Third, present biased investors are more likely to forget WPS. Four, investors who pay more attention to stock prices are more likely to forget WPS. Overall, our findings suggest that investors exhibit motivated memory recall bias.

Suggested Citation

  • Li, King King & Rong, Kang, 2023. "Real-life investors’ memory recall bias: A lab-in-the-field experiment," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).
    • Handle: RePEc:eee:beexfi:v:37:y:2023:i:c:s221463502200082x
    DOI: 10.1016/j.jbef.2022.100760
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    More about this item

    Keywords

    Memory recall bias; Time preference; Attention; Behavioral finance; Experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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