Disposition Effect
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Recent papers in Disposition Effect
More than twenty years ago, Meir Statman and I coined the term disposition effect to describe the predisposition of investors to sell their winners too early and to ride their losers too long. We identified a series of psychological... more
We provide evidence of disposition effect propensity for stock trading simulation participants employing a contrarian versus a momentum strategy. We found that even subjects playing with chips rather than real money remain vulnerable to... more
Previous literature suggests specific behavioral tendencies cause investors to deviate from optimal investing. We investigate three such tendencies in a simplified stock market. Subjects do trade for better stocks, but do not reach their... more
The disposition effect (greater realization of winners than losers) is often taken as proof that investors have an inherent preference for realizing winners over losers. In contrast, we find that the disposition effect is not primarily... more
ABSTRACT:It has been a challenge for financial economists to explain some stylized facts observed in securities markets, among them, high levels of trading volume. The most prominent explanation of excess volume is overconfidence. High... more
The goal of this study is to test the disposition effect, the tendency of investors to sell winning investments too soon and hold losing investments too long, by analyzing all Brazilian equity fund portfolios from November 2003 to March... more
Investment decisions are very difficult because they involve money and can impact our quality of life. According to the axioms of rationality, different but equivalent informa-tion formats should not affect investment strategies. The... more
ABSTRACT This paper investigates the disposition effect on the Portuguese stock market, on the basis of a unique database that consists of trading records of 1496 individual investors. We found strong evidence of the disposition effect,... more