Kick the cat? Retail investors displaced aggression: Evidence from amazon product ratings

Abstract

We present novel findings that the e-commerce market reflects retail investors’ displaced aggression behavior. Market return fluctuations substantially impact the distribution of ratings left by Amazon customers, most of whom invest in equity market, directly or indirectly (defined as reviewer-investors). One standard-deviation decrease in market return leads to a 1.23% reduction in the daily average rating over the following day. Reviewer-investors respond to stock market losses and gains asymmetrically: investors only react to stock market losses. Our findings are consistent with investors’ recursive preferences focusing on the trade-off between current period utility and the certainty equivalent of random future utility.