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

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

Research output: Contribution to conferencePaperResearchpeer-review


Witnessing stock market history in the making leaves behind a vivid story, but does not provide valuable information. Nevertheless, well-versed finance professionals extrapolate from witnessed returns when forming beliefs about expected returns which we show by using a unique dataset regarding professionals' career start in the finance industry. This result is robust to controlling for all publicly available information and interpersonal differences. Additionally, we find that returns witnessed early on in a career are more formative than those witnessed recently. Among the potential channels through which witnessed returns might affect professionals' expectations, a judgmental bias appears the most plausible.
Original languageEnglish
Publication date2017
Number of pages49
Publication statusPublished - 2017
EventThe 15th International Paris December Finance Meeting - Novotel Paris les Halles hotel, Paris, France
Duration: 21 Dec 201721 Dec 2017
Conference number: 15


ConferenceThe 15th International Paris December Finance Meeting
LocationNovotel Paris les Halles hotel
Internet address


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

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