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Kevin Hogan
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How Chatty, Boring People Persuade when Smart People Fail

by Kevin Hogan


Page 3

An interesting study was done at the University of Haifa to see just what kinds of stuff might influence decisions and decision makers...stuff that hadn't been looked at before.

Stock Traders Influenced by Priming In this study, Dr. Doron Kliger (and his student Dalia Gilad) discovered that even accountants and investment advisers are influenced by meaningless information.

Example? The A and A (accountants and advisers) were more likely to rate a traded stock AFTER reading a story on successful risk taking decisions.

"Priming, the underlying psychological mechanism, is well-known in psychology, but to date was not analyzed with regard to financial decision making the way we did," says Kliger in a recent press release.

The study subjects were divided into two groups. One group was given a story on a person who took risks and consequently made big profits.

The second group read a story on someone who refused to take such risks and managed, by doing so, to avoid great losses.

Both groups were given the story in the context of testing their memory abilities. They had no idea what was really being studied was the rating they would give a stock, for example.

After reading the story, the participants were given financial reports of a NASDAQ-traded stock whose name was not revealed.

The reports included short financial reports and a graph presenting the stock's past performance. The financial information given to the two groups was identical, *the only difference being the stories on risk-taking decisions that preceded it.*

After reading the stories, the participants were asked questions regarding the traded stock.

Key Point: Results of the study have shown that the group that read on risk taking that succeeded attributed a higher value to the stock investment than the second group!

"The findings of this research show that risk preferences may be manipulated - while the person making those decisions is unaware of it.

Priming Behavior An investment advisor who reads reports in the morning news that 'encourage' risk taking, might behave entirely differently, on a professional level, than if reading reports on failed risk taking - even if the reports were unrelated to the question at stake.

"Psychology describes varying human behavior depending on numerous factors. It should not be assumed that financial decision makers are immune to such influences," Dr. Kliger pointed out.

Hint!: If you are hoping to encourage people to do business with you, you probably should spare the disaster stories.



What should you do?!



Continue: Page | 1 | 2 | 3 | 4 |






Kevin Hogan
Network 3000 Publishing
3432 Denmark #108
Eagan, MN 55123
(612) 616-0732

Article photos appear under license with Stockexpert and istockphoto/monkeybusinessimages.






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