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How “Point Blindness” Dilutes the Value of Stock Market Reports

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Listed:
  • Lupia, Arthur
  • Krupnikov, Yanna
  • Levine, Adam Seth
  • Grafstrom, Cassandra
  • MacMillan, William
  • McGovern, Erin

Abstract

The stock index “point” is a focal component of financial news reports. While much attention is paid to changes in stock index point totals, few people realize that the value of a stock index “point” varies (and has recently declined). We call this perceptual phenomenon “point blindness” and explain its threat to investors. Simple changes in media presentations of stock index information can counter point blindness. These changes are easy to implement and can help audiences make better financial decisions. An experiment on over 2000 participants shows such changes significantly altering their perceptions of the stock market.

Suggested Citation

  • Lupia, Arthur & Krupnikov, Yanna & Levine, Adam Seth & Grafstrom, Cassandra & MacMillan, William & McGovern, Erin, 2008. "How “Point Blindness” Dilutes the Value of Stock Market Reports," MPRA Paper 9612, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:9612
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    References listed on IDEAS

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    More about this item

    Keywords

    behavioral economics: personal finance; communication;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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