We examine whether investing experience can dampen the disposition effect, that is, the fact that investors seem to hold on to their losing stocks to a greater extent than they hold on to their winning stocks. To do so, we devise a computer program that simulates the stock market. We use the program in an experiment with two groups of subjects, namely experienced investors and undergraduate students (the inexperienced investors). As a control procedure, we consider random trade decisions made by robot subjects. We find that though both human subjects show the disposition effect, the more experienced investors are less affected.

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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We assess the psychophysiological characteristics underlying the disposition effect and find that subjects showing greater disposition effect are those who sweat more and present lower body temperature and heart rate.

The use of financial incentives in experimental economics gained recognition from Smith's seminal work (1962; 1976). However, although this practice is widely adopted internationally, it is still little used in Brazil. Noticing such gap, the objective of this article is to evaluate the impact of the use of financial incentives in experiments in the area of economics and finance. To this end, a simulation of computational investment using ExpEcon was performed with 106 undergraduate students from UFSC. The objective was for them to perform stock purchase and sale operations and with this data it was possible to estimate the variables of the research: disposition coefficient, proportions of realized gains and realized losses. For the analysis, t-tests and multiple regression were estimated in order to assess the impact of financial incentives on the results. To support the discussion, in addition to the theoretical framework, National Health Council (CNS) resolutions No. 466 and No. 510 were discussed. The main results show that there is a need for clearer regulations regarding financial incentives. The results also brought empirical confirmation that financial incentives can alter the behavior of individuals as in the case of the disposition effect. Thus, the originality and importance of this study is highlighted, given that it contributes to the literature not only at the theoretical level, but also by presenting an empirical essay corroborating the theoretical discussion. Such findings and debates do not cease the discussion but foster and encourage critical thinking about financial incentives in experiments in the area.