Decision Weights for Experimental Asset Prices Based on Visual Salience

114 Pages Posted: 19 Aug 2020

See all articles by Devdeepta Bose

Devdeepta Bose

California Institute of Technology

Henning Cordes

University of Muenster - Finance Center

Sven Nolte

Institute for Management Research, Radboud University Nijmegen

Judith C. Schneider

University of Muenster - Finance Center Muenster

Colin Camerer

California Institute of Technology - Division of the Humanities and Social Sciences

Date Written: July 17, 2020

Abstract

We apply a machine-learning algorithm calibrated from general human vision to predict visual salience of parts of a stock price series. We hypothesize that visual salience of adjacent prices increases decision weights on returns computed from those prices. We analyze the inferred decision impact of these weights in three experimental studies that use either historical individual-stock returns or simpler artificial sequences. We find that decision weights derived from visual salience are associated with experimental investments. Their predictability goes beyond alternative theories over-weighting returns at the tails of the historical distribution, or with respect to salient difference from a reference return.

Keywords: Decision Weights, Eye-Tracking, Machine-Learning Algorithm, Visual Salience

JEL Classification: G4, G12

Suggested Citation

Bose, Devdeepta and Cordes, Henning and Nolte, Sven and Schneider, Judith C. and Camerer, Colin F., Decision Weights for Experimental Asset Prices Based on Visual Salience (July 17, 2020). Available at SSRN: https://ssrn.com/abstract=3654021 or http://dx.doi.org/10.2139/ssrn.3654021

Devdeepta Bose (Contact Author)

California Institute of Technology ( email )

1200 East California Blvd.
Pasadena, CA 91125
United States
9176793204 (Phone)

HOME PAGE: http://https://sites.google.com/view/devdeeptabose

Henning Cordes

University of Muenster - Finance Center ( email )

Universitätsstr. 14-16
Muenster, 48143
Germany
+49 251 83 22058 (Phone)

Sven Nolte

Institute for Management Research, Radboud University Nijmegen ( email )

Postbus 9108
Nijmegen, 6500 HK
Netherlands

Judith C. Schneider

University of Muenster - Finance Center Muenster ( email )

Universitatsstr. 14-16
Muenster, 48143
Germany

Colin F. Camerer

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

1200 East California Blvd.
Pasadena, CA 91125
United States
626-395-4054 (Phone)
626-432-1726 (Fax)

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