The Effects of Visualization and Interactivity on Calibration in Financial Decision-Making

Abstract

ABSTRACTWith the increased use of XBRL, financial data are readily available in a universal format, enabling users to dynamically render data with a variety of visual, interactive representations. However, the impact of these interactive visual representations on financial decision-making has received little attention. Further, decision-making research suggests that the presentation of a task (i.e., presentation format) can influence decision-making outcomes such as accuracy, confidence, and the calibration between accuracy and confidence. This study examines how visualization and interactivity affect accuracy, confidence, and calibration in a financial decision-making context. Decision-makers are typically overconfident, and this research proposes that visualization and interactivity provide more informational cues, which can actually further increase overconfidence and reduce calibration in some contexts. An experiment conducted with 157 participants supports the prediction that visualization and interactivity features can increase decision-maker overconfidence. However, interactive visualization, when both interface features are present, increases confidence while also increasing accuracy. As a result, when interactivity and visualization are offered individually, decision-makers are less calibrated, but when both features are offered, decision-makers are more calibrated. Implications for users and designers of interactive visualizations with financial data are discussed.Data Availability: Data are available from the authors upon request.