Survey evidence on diffusion of interest and information among investors

Questionnaire surveys of institutional and individual investors were undertaken to learn about patterns of communications. It was found that direct interpersonal communications are very important in investor decisions. Questions elicited what fraction of investors were unsystematic and allowed thems...

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Bibliographic Details
Published in:Journal of economic behavior & organization 1989-08, Vol.12 (1), p.47-66
Main Authors: Shiller, Robert J., Pound, John
Format: Article
Language:English
Subjects:
Behavior
Communication
Economic models
Effects
Institutional investments
Interpersonal
Investments
Investors
Polls & surveys
Stock brokers
Stockholders
Studies
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Summary:Questionnaire surveys of institutional and individual investors were undertaken to learn about patterns of communications. It was found that direct interpersonal communications are very important in investor decisions. Questions elicited what fraction of investors were unsystematic and allowed themselves to be influenced by word-of-mouth communications or other salient stimuli. Randomly sampled investors were studied as well as investors in stocks whose price had recently increased dramatically. Contagion or epidemic models of financial markets are proposed in which interest in individual stocks is spread by word of mouth. The survey evidence is interpreted as supporting such models.
ISSN:0167-2681
1879-1751
DOI:10.1016/0167-2681(89)90076-0