Mood and the Market: Can Press Reports of Investors’ Mood Predict Stock Prices?

We examined whether press reports on the collective mood of investors can predict changes in stock prices. We collected data on the use of emotion words in newspaper reports on traders’ affect, coded these emotion words according to their location on an affective circumplex in terms of pleasantness and activation level, and created indices of collective mood for each trading day. Then, by using time series analyses, we examined whether these mood indices, depicting investors’ emotion on a given trading day, could predict the next day’s opening price of the stock market. The strongest findings showed that activated pleasant mood predicted increases in NASDAQ prices, while activated unpleasant mood predicted decreases in NASDAQ prices. We conclude that both valence and activation levels of collective mood are important in predicting trend continuation in stock prices

Mental Imagery, Impact, and Affect: A Mediation Model for Charitable Giving

One of the puzzling phenomena in philanthropy is that people can show strong compassion for identified individual victims but remain unmoved by catastrophes that affect large numbers of victims. Two prominent findings in research on charitable giving reflect this idiosyncrasy: The (1) identified victim and (2) victim number effects. The first of these suggests that identifying victims increases donations and the second refers to the finding that people's willingness to donate often decreases as the number of victims increases. While these effects have been documented in the literature, their underlying psychological processes need further study. We propose a model in which identified victim and victim number effects operate through different cognitive and affective mechanisms. In two experiments we present empirical evidence for such a model and show that different affective motivations (donor-focused vs. victim-focused feelings) are related to the cognitive processes of impact judgments and mental imagery. Moreover, we argue that different mediation pathways exist for identifiability and victim number effects