Batra, Joy. “Ir/Rational Exuberance”, Boston College, 2009. http://hdl.handle.net/2345/692.
Research has shown that individuals can be persuaded of a message in two ways: using a central (rational) approach, or through a peripheral (more “irrational”) approach in which irrelevant signals are seen as convincing. In addition, it is suggested that recent negative experiences cause individuals to favor the central route, whereas individuals in positive moods rely more heavily on the peripheral route. I extend these findings to the realm of financial advertising by presenting a simple model predicting that mutual funds will use more economically rational arguments when stock market returns have been low, and will cater to irrational inclinations when returns have been high. These predictions are supported by two case studies of print advertisements in Money and the Journal of Financial Planning from the period January 2003 to March 2009.