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The purpose of this paper is to investigate how trust in the sender of financial information and a narrative vs fact-related format of the information influence intentions to save in a mutual fund.

In Experiment 1, 186 undergraduates participate and in Experiment 2, 434 Swedish citizens between 18 and 70 years randomly chosen from a consumer panel. In both experiments participants are randomized to two conditions in which they are presented with the same information about a mutual fund in a narrative or a traditional fact-related format. In four different between-groups conditions crossed with information format, pre-tested descriptions of different fictitious banks are presented. The descriptions are combined in a fractional factorial design such that one bank is low in the three trust determinants of competence, benevolence and transparency, whereas the other three banks are high in one of the trust determinants but lower in the others. Ratings are made of the information with respect to how much positive affect the information evokes, interest in the message and intention to save in the mutual fund.

In both experiments the narrative compared to the fact-based information format increases positive affect, interest and intention to save. Trust in the bank has an independent effect of increasing the intention to save.

The narrative format of financial information may be key to increase involvement in financial choices but needs to be supplemented by a message that reinforces the positive affect and interest evoked by the format.

A demonstration of how a narrative format of financial information and trust in the sender jointly influence intentions to save in a mutual fund.

The purpose of this paper is to investigate whether a narrative compared to a traditional fact-related format of financial information elicits more involved processing of such information by consumers and therefore more informed choices of retirement savings.

A total of 394 undergraduates were recruited to three experiments. In Experiments 1 and 2 participants presented with information about a mutual fund were randomly assigned to one of four conditions (narrative format vs fact-related format crossed with optimistic vs pessimistic financial forecast). In both experiments dependent variables were positive affect, emotive response and purchase intention, and in Experiment 2 also scepticism about the information. Involvement and financial knowledge were furthermore measured in Experiment 2. In Experiment 3 information was presented about a savings account. Participants were randomly assigned to either a condition with a narrative or a fact-related information format. The dependent variables were the same as in Experiment 2.

The research finds support for that information about a financial message in a narrative format results in stronger positive affect, emotive response and purchase intention. No effect of scepticism toward the message is observed. Involvement and financial knowledge tend to interact with format. Mediation analyses support that positive affect induced by the narrative format impacts on emotive response which jointly with positive affect impacts on purchase intention.

The research suggests that a narrative message format may be used in marketing financial products to increase passive consumerś involvement.

The first demonstration of that a narrative format has an effect on processing of financial information.

The purpose of this paper is to measure individual investors’ expectations of risk and return and to evaluate different expectation measures.

The authors measure individual investors’ expectations of risk and return regarding an index fund and two stocks using survey data on a random sample of individual investors in Sweden. The survey contains three different return and four different risk expectation measures. To evaluate the different expectation measures, three different evaluation perspectives are considered.

The risk expectations obtained from the different measures are positively correlated across respondents, but their average magnitudes differ considerably across measures. The return expectations are also positively correlated, and their magnitudes also differ, but to a lesser extent. Consequently, the same individual can express risk expectations that either underestimate or overestimate the forward risk, depending on the measure that is used. The variations in the expectations mainly relate to differences in the responses to the questions underlying the different measures, rather than to the methods used to obtain the expectations. The results from the evaluation of the measures indicate that the expectation measure proposed by Dominitz and Manski (2011) is the only measure for which it is possible to distinguish between individuals’ expectations, using all three of the evaluation perspectives.

This is, to the best of the authors’ knowledge, the first paper that evaluates different survey measures of individual investors’ expectations of risk and return.

The purpose of this paper is to investigate the relationship between individual investors’ level of sophistication and their expectations of risk and return in the stock market.

The author combines survey and registry data on individual investors in Sweden to obtain 11 sophistication proxies that previous research has related to individuals’ financial decisions. These proxies are related to a survey measure regarding individual investors’ expectations of risk and return in an index fund using linear regressions.

The findings in this paper indicate that sophisticated investors have lower risk and higher return expectations that are closer to objective measures than those of less-sophisticated investors.

These results are important, since they enhance the understanding of the underlying mechanisms through which sophistication can influence financial decisions.