Attention Allocation of Investors on Social Media: The Role of Prospect Theory.
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| Title: | Attention Allocation of Investors on Social Media: The Role of Prospect Theory. |
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| Authors: | Reichenbach, Felix (AUTHOR), Walther, Martin (AUTHOR) |
| Source: | Journal of Behavioral Finance. Jul-Sep2025, Vol. 26 Issue 3, p317-334. 18p. |
| Subjects: | Investors, Prospect theory, Market sentiment, Securities, Social media, Selectivity (Psychology) |
| Abstract: | This study examines the attention allocation of investors on social media. Specifically, we consider the role of cumulative prospect theory (CPT). Using data from the largest finance-related subreddits on Reddit, we investigate whether CPT values based on historical returns can explain which stocks are discussed, and which stocks are ignored. Our results indicate that the behavior of millions of redditors is consistent with CPT, with stocks having extreme CPT values being significantly more likely to be discussed. Furthermore, we find that stocks with high momentum and extreme price-to-book values are more attractive to social media investors. [ABSTRACT FROM AUTHOR] |
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| Database: | Psychology and Behavioral Sciences Collection |
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| Abstract: | This study examines the attention allocation of investors on social media. Specifically, we consider the role of cumulative prospect theory (CPT). Using data from the largest finance-related subreddits on Reddit, we investigate whether CPT values based on historical returns can explain which stocks are discussed, and which stocks are ignored. Our results indicate that the behavior of millions of redditors is consistent with CPT, with stocks having extreme CPT values being significantly more likely to be discussed. Furthermore, we find that stocks with high momentum and extreme price-to-book values are more attractive to social media investors. [ABSTRACT FROM AUTHOR] |
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| ISSN: | 15427560 |
| DOI: | 10.1080/15427560.2024.2309145 |
