Events

Professor Kai Li
Fellow of the Royal Society of Canada
Canada Research Chair in Corporate Governance
W. Maurice Young Chair in Finance
Professor of Finance
UBC Sauder School of Business
University of British Columbia

This paper examines how investors’ effortless intuition (System 1) and deliberate reasoning (System 2) jointly influence their investment decisions. We assemble a novel dataset of livestream promotional events associated with the initial offerings of mutual funds in China between 2020 and 2024, a setting in which no prior performance records or portfolio disclosures are available, allowing us to isolate the effects of distinct cognitive processes. We find that investors’ intuitive favorable responses to presenters’ dynamic emotional displays, including vocal tone, facial expressiveness, and body movement, are positively and significantly related to subsequent fund subscriptions. This effect attenuates when livestreams convey (complex) information or feature fund managers, engaging investors’ analytical processing and indicating that System 2 scrutiny can override System 1-driven impressions. We further show that this overriding effect weakens when System 2 faces capacity constraints, such as distraction from concurrent livestreams, distraction from extreme market returns, and cognitive overload from long livestreams. Our novel evidence on the interaction of intuition and reasoning in shaping investment choices provides a foundation for a richer positive theory of investor behavior.