Grit, Loss Aversion, and Investor Behavior
| Autor: | Sima Jannati, George M. Korniotis, William J. Bazley |
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| Rok vydání: | 2021 |
| Předmět: |
History
Polymers and Plastics media_common.quotation_subject Control (management) Disposition effect Industrial and Manufacturing Engineering Microeconomics Investment decisions Prospect theory Loss aversion Economics Quality (business) Business and International Management Big Five personality traits Grit media_common |
| Zdroj: | SSRN Electronic Journal. |
| ISSN: | 1556-5068 |
| DOI: | 10.2139/ssrn.3866704 |
| Popis: | We examine whether grit affects individuals' preferences and trading decisions. Grit is the sustained effort toward a goal despite setbacks. It is malleable and distinct from the Big Five personality traits. Using experiments formalized in prospect theory, we find that grit reduces loss aversion. By diminishing loss aversion, gritty investors exhibit a lower disposition effect since they are more willing to exit losing investments. Consequently, they accumulate about 7% more wealth relative to control participants. Overall, grit affects the quality of investment decisions. Ultimately, our results suggest that interventions cultivating grit could improve households' financial outcomes. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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