Prices and returns are alternative ways to present financial market information and to elicit financial market expectations. But do investors make sense of prices and returns in the same way? Also, do they state the same expectations when asked to forecast prices or to forecast returns? This paper compares the two formats in three studies with subjects of varying expertise, with various amount of information and with different incentive schemes. The results are consistent across all studies: Asking subjects to forecast returns as opposed to price levels results in higher expectations, whereas showing them return bar charts as opposed to price level line charts results in lower expectations. Our results imply that information platforms and financial advisors could affect investors' expectations by varying superficial features of the decision environment. Financial education is unlikely to be a useful remedy, since financial professionals are not immune to the impact of format changes.


Glaser, Markus
Iliewa, Zwetelina
Weber, Martin


expected returns, information presentation, elicitation format, judgmental forecasting, professional forecasters