The disposition effect in team investment decisions: Experimental evidence

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: cege Discussion Papers ; No. 256

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Group Behavior ; Analysis of Collective Decision-Making: General ; Asset Pricing; Trading Volume; Bond Interest Rates
• Subject: Decision-dependent emotions ; Disposition Effect ; Experiment ; Team Decision Making

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Rau, Holger A.
• Event: Veröffentlichung
• (who): University of Göttingen, Center for European, Governance and Economic Development Research (cege)
• (where): Göttingen
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/117334
• Last update: 10.03.2025, 11:44 AM CET