Information Cherry-Picking : When Confirmation Bias Met Anchoring Bias

We hypothesize that a surge in availability of information coupled with investors’ confirmation bias could aggravate retail investors’ behavioral biases due to their cherry-picking of information that only confirms their priors. We use the staggered EDGAR implementation to provide causal inference for our hypothesis. We find that retail investors’ anchoring tendency is amplified in the post-EDGAR period. The effect is most evident shortly after the release of corporate 10K/Q reports, for Internet users and sophisticated investors, and among stocks with higher information uncertainty. The exacerbated anchoring bias in the post-EDGAR period also makes retail investors lose more money in trading