Framing, Investments, and the Valence of Convex Shapes

We extend the literature on emotions and price paths shapes by varying the framing of the investment decision. Within a large scale behavioral experiment, run on Prolific, we focus on the decision situation (buy or sell), and on the role of the decision maker (private investor, fund manager, delegation to fund manager). While controlling for the investment choice is a prerequisite for our analyses, we explicitly elicit the valence of the price paths visualizations. Our findings support all previous studies. The convexity of a price path is associated with more positive valence and higher investments. This effect is on average more pronounced for sell than for buy decisions. However, the finding is independent of whether one decides for their own, for others or the decision is delegated to a fund manager. The persistence of the relation between shape and valence encourages testing the effect of convex and concave price shapes (positive and negative valence) with real market data