Wall Street Crosses Memory Lane: How Witnessed Returns Affect Professionals' Expected Returns

Arvid O. I. Hoffmann, Zwetelina Iliewa, Lena Jaroszek

Research output: Working paperResearch


Witnessing stock-market history in the making creates a vivid story, but does not provide valuable information. However, finance professionals extrapolate from personally witnessed returns, which we show by using a unique dataset about the timing of their career start in the finance industry. This result is robust when controlling for all publicly available information and other time-fixed effects as well as interpersonal differences. Additionally, we find that returns witnessed early in the career are more formative than those witnessed recently. Finally, among the potential channels through which witnessed returns might affect expected returns, a judgmental bias appears most plausible.
Original languageEnglish
Place of Publicationwww
PublisherSSRN: Social Science Research Network
Number of pages51
Publication statusPublished - 2016


  • Finance professionals
  • Expected returns
  • Non-informative observations
  • Early career experiences

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