Psychophysiological Correlates of the Disposition Effect

Goulart, Marco; Costa, Newton Da; Santos, André Alves Portela; Takase, Emílio; Silva, Sergio Da

doi:10.1371/journal.pone.0054542

Cited by 15 publications

(13 citation statements)

References 8 publications

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“…In order to identify the respondents’ “real” behavior with relation to their preferences for assets and their appetite for risk, computational investment simulation was conducted with the aid of ExpEcon (Experimental Economics) software. This software is used to identify participants’ behavior and decisions in situations of risk [11, 12].…”

Section: Methodological Proceduresmentioning

confidence: 99%

“…This study employs the experimental method to achieve these objectives, with application of structured questionnaires, and computer simulation of investments with Expecon software utilizing data on real financial instruments that are available on the market [11, 12]. This makes it possible to identify respondents’ behavior in terms of their preferences for financial instruments and their risk profiles.…”

Section: Introductionmentioning

confidence: 99%

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Personality traits and investor profile analysis: A behavioral finance study

et al. 2019

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This study investigates which of four paradigms best portrays the risk profile manifest by investors in their financial asset investment decisions. The paradigms used to explain this profile were: prospect theory, investor profile analysis (IPA), the Big Five Personality Test, and the Cognitive Reflection Test (CRT). The choice of proxy for the risk preferences (profile) of a typical investor was defined by simulating investments in a laboratory setting. The results are analyzed using ordered logistic regression and show that people who have greater risk tolerance according to IPA, who violate prospect theory, and who have a high degree of openness to experience have the greatest probability of taking higher levels of risk in their investment decisions. With regard to the CRT, higher numbers of correct responses in this test has an inverse relationship with risk taking.

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Section: Methodological Proceduresmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Personality traits and investor profile analysis: A behavioral finance study

et al. 2019

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“…The importance of emotions is also confirmed by neuroeconomic approaches. Goulart et al (2013) emphasize in a skin-conductor study that subjects with higher disposition effects sweat more.…”

Section: Experiments On the Disposition Effectmentioning

confidence: 99%

The disposition effect in team investment decisions: Experimental evidence

Rau

2015

Journal of Banking & Finance

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may August 2015Abstract This paper experimentally studies the disposition effects of teams and individuals.The disposition effect describes the phenomenon that investors are reluctant to realize losses, whereas winners are sold too early. Our experiments compare the investments of two-person teams to a setting where investors trade alone. We find that subjects investing jointly exhibit more pronounced disposition effects than individuals. A closer look reveals that investor teams hardly realize losses and predominately sell winners. The data suggest that decision-dependent emotions may explain the differences. That is, teams reporting high levels of regret exhibit significantly higher disposition effects than individuals.JEL Classification numbers: C92, D70, G12.

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“…In the latter strand, with the exception of a few experimental studies which use student samples rather than examine real investor behaviour (e.g. Goulart et al, 2013), there has been little systematic attention to the influence of emotions. Our research investigates investors' reliance on emotionally influenced cognitive processes, and investors' strategies for regulating emotions, as an explanation of investor variability in the disposition effect.…”

Section: The Disposition Effectmentioning

confidence: 99%

“…Research on investor differences in the disposition effect focuses on sophistication (Dhar & Zhu, 2006;Feng & Seasholes, 2005), experience (Seru et al, 2010) and stop loss use (Richards, Rutterford, Kodwani, & Fenton-O'Creevy, 2017). Experimental research (typically with student rather than investor samples) indicates that emotions (Goulart et al, 2013) and regulatory focus (Kim & Young, 2016) bear relevance for students' susceptibility to this bias but lacks the ecological validity of studies considering investor behaviour with significant financial consequences in real markets. Therefore, we address a gap in the literature by combining records of real investor behaviour (real market trades) with psychometric data to research whether investors' reliance on emotional and cognitive processes, and investors' strategies for regulating emotions, predict their susceptibility to the disposition effect when making consequential decisions in real markets.…”

Section: Introductionmentioning

confidence: 99%