Abstract
We study the behavior of the stock market professionals in the experimental settings. A novelty of the experimental design is the use of real financial market data and real private information. In this study, we compare two different subject pools: the forecasts of uninformed investors whose only information is past returns and the forecasts of informed investors whose information is reliable private information and past returns. We found that the affect heuristic in forecasts occurs as both informed and uninformed investors use large financial center past returns for forecasting small country stock returns. The results suggest that stock market professionals have behavioral bias, such as the illusion of validity in this experiment.
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