Animation shapes how investors perceive stock prices

Release Date: July 7, 2021

“Modern data visualization tools are efficient because their representations are perceptually intuitive, but these tools can lead to biased portfolio management. ”
Arun Lakshmanan, Associate Professor of Marketing
University at Buffalo School of Management

BUFFALO, N.Y. — A stock appears riskier when its prices are presented in an animated line graph rather than a traditional static line graph, according to new research from the University at Buffalo School of Management. 

Recently published in the Journal of Marketing Research, the study found that animated displays of time-varying data like stock or commodity prices affect decision making for investors, consumers and managers by enhancing their perceptions of risk driven by the data.  

“Retail investors see how the prices of stocks in their portfolio change over time to judge their financial risks, and commodity trading managers form expectations of changes in the market based on movement in pricing over time,” says Arun Lakshmanan, PhD, associate professor of marketing in the UB School of Management. “Animation focuses the viewer’s attention on specific features, which leads them to draw stronger inferences about risk.”

The researchers conducted a series of six studies to investigate the role of animated display where the change in data implied the probability of losing capital—one study in commodity trading and five in personal finance. The studies included laboratory, online and field experimentations that showed that animations were effective across varying levels of industry expertise, experience, age, gender and other demographics.

Lakshmanan urges caution for retail investors, as more financial service providers like Plus500, Robinhood and Saxo Markets employ graphical dashboards with interactive visualizations.

“Modern data visualization tools are efficient because their representations are perceptually intuitive,” he says. “But these tools can lead to biased portfolio management. In turn, it may cause lay investors to pass up opportunities that might yield solid returns. On the other hand, animated display may also prevent them from making reckless investment decisions by moderating their feelings about risk.” 

In addition, the researchers say their findings may have broader implications for visual information processing, data visualization, financial decision making and public policy.

“Animation is a subtle but powerful mode of data display that can affect judgment,” says Lakshmanan. “As our environment becomes more saturated with information, our study shows that a more nuanced understanding of dynamic forms of display—like animation—is an interesting and practical area for future research.”

Lakshmanan collaborated on the study with Junghan Kim, assistant professor of marketing in the Singapore Management University Lee Kong Chian School of Business.

The UB School of Management is recognized for its emphasis on real-world learning, community and economic impact, and the global perspective of its faculty, students and alumni. The school also has been ranked by Bloomberg Businessweek, the Financial Times, Forbes and U.S. News & World Report for the quality of its programs and the return on investment it provides its graduates. For more information about the UB School of Management, visit

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