Hedging against embarrassment

Goulart, Marco; Costa, Newton C. A. da; Andrade, Eduardo B.; Santos, André Alves Portela

doi:10.1016/j.jebo.2015.04.014

Cited by 29 publications

(24 citation statements)

References 33 publications

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“…Choosing the unethical alternative is associated with committing a moral transgression that will be publicly known by others, so that anticipated feelings of shame are high, which reduces the expected value of the unethical alternative. When anticipating the emotion of embarrassment, people avoid taking risks to keep others from viewing their bad actions [ 13 ], whereas when anticipating the emotion of shame, the key lies in avoiding morally inappropriate behaviors that can endanger one’s self-esteem and social inclusion [ 26 ].…”

Section: Discussionmentioning

confidence: 99%

“…Additionally, as in the study by Da Costa, Andrade and Santos [ 13 ], the participants of the conditions 3 and 4 were informed that their decisions would be made public (public situation), and the participants of the conditions 1 and 2 were advised that their decision would remain anonymous (private situation). Therefore, in the private situation, the decisions that involved obtaining a profit through unethical behaviors were emotionally displayed with a socio-moral affective charge.…”

Section: Methodsmentioning

confidence: 99%

“…However, the opposite conclusion was reached when the state of embarrassment was related to the decision problem. Goulart, Da Costa, Andrade and Santos [ 13 ] showed that when people expected their financial performance results to be published, the disposition effect increased; that is, people sold more profitable shares in order to guarantee their benefits and avoid the embarrassment of bad decisions. This conservative attitude toward anticipated embarrassment contrasts with the search for risk stemming from the embarrassment experienced in previous studies.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Shame in decision making under risk conditions: Understanding the effect of transparency

Bonavía

Brox-Ponce

2018

PLoS ONE

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The role played by the emotion of shame in the area of decision-making in situations of risk has hardly been studied. In this article, we show how the socio-moral emotions and the anticipated feeling of shame associated with different options can determine our decisions, even overriding the cognitive choice tendency proposed by the certainty effect. To do so, we carried out an experiment with university students as participants, dividing them into four experimental conditions. Our findings suggest that people avoid making unethical decisions, both when these decisions are made public to others and when they remain in the private sphere. This result seems to indicate that the main factor in not making unethical decisions is related to the need to avoid transgressing an internal moral standard of behavior, and that the role of transparency is less relevant than expected. However, we propose that, although the effect of transparency is limited in reducing unethical economic decisions, it should continue to be taken into account in theoretical models that address the reasons people behave unethically.

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Section: Discussionmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Shame in decision making under risk conditions: Understanding the effect of transparency

Bonavía

Brox-Ponce

2018

PLoS ONE

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“…Finally, it is perceived that experiment continues to be a widely used method in behavioral finance. For example, the papers by Bulipopova et al (2014), Goulart et al (2015), Kempf et al (2014), and Ploner (2017) used the experimental method to study the behavior of individuals in different decision-making situations.…”

Section: The Experimental Methods In Behavioral Financementioning

confidence: 99%

Behavioral Finance Experiments: A Recent Systematic Literature Review

2020

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This article aims to elaborate a systematic literature review (SLR) on the subject of experiments in behavioral finance, including papers published between 2014 and 2018. Methodology involved the careful selection of articles published in Web of Science and Scopus databases, and bibliometric analysis was applied. Final sample included 60 articles, the Journal of Behavioral Finance was the most productive journal and the majority of the 152 authors worked in the Americas. For cocitation, important authors, such as Kahneman and Tversky and Barber and Odean were among the most cited and with greater relational ties. For bibliographic coupling, Bursztyn et al. and Bigelow et al. were the most cited, whereas Kadous et al. presented more relational ties. The research contribution lies in the application of the SLR to a growing research area, allowing to know the most relevant subjects, articles, journals, authors, and countries in the area nowadays.

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“…Competitive payment schemes are very common among professional traders and have been shown to affect portfolio choices, improving stock selection ability (Elton et al 2003), but also affecting portfolio volatility (Brown et al, 1996;Dijk et al, 2014). Goulart et al (2015) conduct an experiment in which profits are made public, finding that this increases the DE by inducing a higher rate of realized winners.…”

Section: Plrmentioning

confidence: 99%

An experimental analysis of the disposition effect: Who and when?

Cueva

Iturbe-Ormaetxe

Ponti

et al. 2019

Journal of Behavioral and Experimental Economics

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The disposition effect (DE) is a common bias by which investors tend to sell winning assets too soon and hold losing assets too long. We complement the existing evidence in three directions. First, we check whether the DE is robust to realistic features such as transaction costs and competitive payment schemes. Second, by using a gender-balanced design, we check for gender differences. Third, we search for psychological correlates of the DE. We find that the DE is positive and significant in all our treatments. We do not find significant differences across treatments, although transaction costs significantly reduce the propensity to sell both winners and losers. We find somewhat larger DE in women, but this effect is only significant in the second half of the experiment. On the other hand, women are more reluctant to sell losing assets throughout the experiment. Finally, we find that the most significant psychological predictors of the DE are difficulty recognizing one's mistakes and optimism. Subjects scoring high in these traits are less likely to sell at a loss and therefore exhibit a larger DE. Our results provide further suggestive evidence of cognitive dissonance as an important determinant of the DE.

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Hedging against embarrassment

Cited by 29 publications

References 33 publications

Shame in decision making under risk conditions: Understanding the effect of transparency

Shame in decision making under risk conditions: Understanding the effect of transparency

Behavioral Finance Experiments: A Recent Systematic Literature Review

An experimental analysis of the disposition effect: Who and when?

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