Echo Chambers

58 Pages Posted: 8 Jun 2020 Last revised: 16 Jan 2021

See all articles by J. Anthony Cookson

J. Anthony Cookson

University of Colorado at Boulder - Leeds School of Business

Joseph Engelberg

University of California, San Diego (UCSD) - Rady School of Management

William Mullins

University of California, San Diego (UCSD)

Date Written: January 15, 2021

Abstract

We find evidence of selective exposure to confirmatory information among 400,000 users on the investor social network StockTwits. Self-described bulls are 5 times more likely to follow a user with a bullish view of the same stock than self-described bears. Consequently, bulls see 62 more bullish messages and 24 fewer bearish messages than bears over the same 50-day period. These “echo chambers” exist even among professional investors and are strongest for investors who trade on their beliefs. Finally, beliefs formed in echo chambers are associated with lower ex-post returns, more siloing of information and more trading volume.

Keywords: selective exposure theory, echo chambers, confirmation bias, endogenous information acquisition

JEL Classification: G41, G12

Suggested Citation

Cookson, J. Anthony and Engelberg, Joseph and Mullins, William, Echo Chambers (January 15, 2021). Available at SSRN: https://ssrn.com/abstract=3603107 or http://dx.doi.org/10.2139/ssrn.3603107

J. Anthony Cookson (Contact Author)

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States

Joseph Engelberg

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

William Mullins

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0112
United States

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