The Informational Role of Imagery in Financial Decision Making: A New Approach

Abstract

What is the incremental information in imagery? This paper introduces the concept of visual attention and proposes a new methodology to identify the effect of information content provided in images, above and beyond that of contemporaneous textual information. Our objective (non-behavioral) approach introduces two sets of criteria for analyzing the effects of images - visual clarity and information content/reinforcement, which together inform individual investors in fi nancial decision making. This flexible methodology can be seamlessly integrated with various modern information processing techniques, from simple keyword matching to advanced semantic analysis or topic modeling. Applying our methodology to a hand collected data set of equity crowdfunding campaigns, we show that the existence of perceptible images is signi ficantly associated with greater investment, and that visual clarity measures are found to incrementally affect investor decision making after controlling for textual sentiment and fi nancial information. Speci fically, more vibrant (intense) images with more focal points are associated with higher funding. Importantly, we find that the information reinforcing dichotomy we propose is a key determinant of (limited) visual attention: informationally additive images are those for which visual clarity measures are signi ficant, and those which seem to be associated with greater investor attention and investment. Finally, the methodology we develop in this paper provides the groundwork for a new framework within which to discuss (limited) attention, information, news, and investor reactions in today's digital and visual age.