Nominal or Proportional Investments: Investment Strategies, Judgments of Asset Accumulations and Time Preference

Nichel Gonzalez


This study investigated how fund investment strategies can be influenced by the response format, nominal or proportional. Additionally, judgments of accumulated assets and time preference were investigated. Participants were randomized to express their investments either as SEK or as a percentage of fund assets, in vignette scenarios. Historical and forecasted fund interest rate information was varied in a factorial design. The SEK participants ignored more information than the percent participants, and used a fixed strategy to a greater extent (investing all or no assets). Furthermore, SEK participants relied more on forecasts than percent participants. Importantly, strategies varied a lot among individuals in both conditions. Interestingly, asset judgments were barely related to investment decisions, but time preference was. The large intra-individual variation suggests that there is no “one size fits all” way to give investment advice. Furthermore, advisors should be aware that people may invest differently if they think proportionally instead of nominally.


Key words: Asset accumulation; Investments; Response format; Nominal value; Proportional value.


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