The Causal Effect of Stop-Loss and Take-Gain Orders on the Disposition Effect
| Autor: | Urs Fischbacher, Simeon Schudy, Gerson Hoffmann |
|---|---|
| Rok vydání: | 2017 |
| Předmět: |
TheoryofComputation_MISCELLANEOUS
Economics and Econometrics 050208 finance jel:C91 Ex-ante 05 social sciences Causal effect Disposition effect ComputerApplications_COMPUTERSINOTHERSYSTEMS Commit jel:C91 G02 G11 jel:G02 jel:G11 Microeconomics Treatment and control groups Stop loss disposition effect stop-loss orders limit sales experiment finance Accounting 0502 economics and business ddc:330 ComputingMilieux_COMPUTERSANDSOCIETY Business 050207 economics Laboratory experiment Finance |
| Zdroj: | The Review of Financial Studies. 30:2110-2129 |
| ISSN: | 1465-7368 0893-9454 |
| DOI: | 10.1093/rfs/hhx016 |
| Popis: | The disposition effect, i.e., the tendency to sell winning stocks too early and losing stocks too late is one of the most frequently observed and discussed biases of financial investors. We investigate in a laboratory experiment whether the option of automatic selling devices causally reduces investors’ disposition effect. Our investors can actively buy and sell assets, and, in the treatment group, additionally use stop-loss and take-gain options to automatically sell assets. Investors who had access to the automatic selling devices had significantly smaller disposition effects. The reduction was driven by a significant increase in realized losses. The proportion of winners realized was similar in both treatments. Additionally, our setup provides new evidence on which reference prices investors relate to when choosing limits for automatic sales. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
|