Review of Financial Studies Vol. 36 No. 2 2023

Echo Chambers

J. Anthony Cookson¹; Joseph Engelberg²; William Mullins²

¹ Leeds School of Business, University of Colorado at Boulder , USA · ² Rady School of Management, University of California San Diego , USA

Abstract

We find evidence of selective exposure to confirmatory information among 400,000 users on the investor social network StockTwits. Self-described bulls are five times more likely to follow a user with a bullish view of the same stock than are self-described bears. Consequently, bulls see 62 more bullish messages and 24 fewer bearish messages than bears do over the same 50-day period. These “echo chambers” exist even among professional investors and are strongest for investors who trade on their beliefs. Finally, beliefs formed in echo chambers are associated with lower ex post returns, more siloing of information, and more trading volume.

DOI

10.1093/rfs/hhac058

Volume

36

Issue

2

Pages

450-500

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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