Echo Chambers in Investment Discussion Boards
Shiliang Tang
Qingyun Liu
Megan McQueen
Scott Counts
Apurv Jain
Haitao Zheng
Ben Y. Zhao
Proc. of the 17th International AAAI Conference on Web and Social Media (ICWSM 2017)
[Full Text in PDF Format, 412KB]
Paper Abstract
We examine the quality of information and communication in online investment discussion boards. We
show that positivity bias and skewed risk/reward assessments, exacerbated by the insular nature of
the community and its social structure, contribute to underperforming investment advice and
unnecessary trading. Discussion post sentiment has negligible correlation with future stock market
returns, but does have a positive correlation with trading volumes and volatility. Our trading
simulations show that across different timeframes, this misinformation leads 50-70% of users to
underperform the market average. We then examine social structure in communities, and show that the
majority of market sentiment is produced by a small number of community leaders, and that many
members actively resist negative sentiment, thus minimizing viewpoint diversity. To improve
generated information content in online investment communities, we suggest designing to increase
diversity of opinion, minimize friction around incorporating new information, and provide
performance feedback for self-correction.