is the moment a company starts selling shares on an exchange, and logic says an investor would judge it on the company and the market. Here the state of the market was separated from what each investor personally experienced. Which of them predicted demand?
The personal one. A previous personal gain predicted to the next offering, even after controlling for and for changes in wealth. One experience carried more weight than the general picture, in a pattern recalling : whatever paid off once was tried again.
The difficulty in work like this is not finding a link but separating two things that move together. When the market is hot, every offering rises and every investor gains, and demand rises too. So a correlation between a past gain and the next demand says nothing unless the state of the market is removed.
The solution is to follow the same investor across different decisions. Finland has order data at the individual level, which allows a narrow question: given two investors who took part in the same offerings, did the one who personally gained more ask for more next time. That is a question about personal experience rather than about the market.
The answer is yes, and it holds after controlling for the offering cycle and for changes in wealth. So this is not about someone who got richer and had more to invest, nor about someone who read the market correctly. The pattern recalls reinforcement learning: whatever paid off once was tried again, even when the previous time was mostly luck.
What the card does not say matters as much. There is no claim here that the next offering will succeed or fail, and no recommendation. What was measured is that one personal experience receives more weight than the general picture, which is a bias you can notice in yourself. The data also come from one market and one period.
wat. Investors gave the gain they themselves received on an offering more weight than the broad picture of the market.
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Learning from experience is useful, and a small personal sample can make someone believe an investment style succeeded in general.
How do we know?
Order and return data from offerings in Finland linked each later decision to the outcomes the same investor had received before.
What is still unknown
The findings come from one offering market and particular financial institutions; they do not show what any investor consciously thought.
Learn something?
Where to next
How does the list of funds at work change the risk in your savings?markets
What happened to a share after more people searched for it online?markets
What happens to an important report when many companies publish on the same day?markets