Tear down this wall street: Anti-market rhetoric, motivated beliefs, and investment
Abstract
Anti-market ideology pre-exists modern capitalism, is diffused in capitalistic economies, and peaks during economic crises. Is anti-market ideology an inert cultural by-product of crises, or does it affect economic decision making? If it does, through which channels? I manipulate exposure to anti-market ideology in an artefactual field experiment. Subjects exposed to anti-market ideology invest less often and less money in risky financial opportunities than controls. The effect is stronger for women, older, and college-educated subjects. Risk aversion does not change with exposure. Instead, treated subjects have a more negative view of the financial sector, even if they do not realize they are exposed to anti-market ideology. They react to positive news but not to negative news regarding investment payoffs in subsequent investment choices. These results are consistent with context-dependent beliefs. Contrary to behavioral biases, anti-market ideology makes more sophisticated agents deviate from neoclassical decision-making.