Trading Faces

NY Times summarized a study from  The Proceedings of the National Academy of Sciences on company names, language and money:

A stock ticker symbol or company name that is easy to pronounce may be a significant factor in short-term increases in stock price, according to a report published online yesterday in The Proceedings of the National Academy of Sciences.

Two researchers created a list of fictional stocks and then had a group of students rate them according to ease of pronunciation. “Ulymnius,” for example, was rated complex, while “Mayville” was not.

They then asked a second group to estimate the future performance of each of the stocks. As the researchers predicted, “fluently named” companies were estimated to outperform the hard-to-pronounce ones by a significant margin.

…People respond positively to easily processed information in other areas as well. For example, they are more likely to believe an aphorism that rhymes (”woes unite foes”) than one with an identical meaning that does not rhyme (”woes unite enemies”). Studies cited in the report demonstrate that people more often judge easily processed information to be true, likable, familiar and convincing than more complex data.

The Times fails to mention two other curious reports in Sunday’s PNAS, notably, “Polarized axonal surface expression of neuronal KCNQ channels is mediated by multiple signals in the KCNQ2 and KCNQ3 C-terminal domains” and “A hybrid two-component system protein of a prominent human gut symbiont couples glycan sensing in vivo to carbohydrate metabolism”, which are basically concise summaries of the Interbrand and Landor naming processes, respectively.

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