Disposition Effect and Tolerance to Losses in Stock Investment Decisions: An Experimental Study

Braga, Robson; Fávero, Luiz Paulo Lopes

doi:10.1080/15427560.2017.1308946

Cited by 16 publications

(15 citation statements)

References 20 publications

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“…The theory is depicted by Kahneman and Tversky (2013) in a hypothetical value function to explain the role of values based on the deviation from the reference point of gain and loss. However, it has been discovered that the loss position has a more significant influence in terms of psychology than gain (Braga & Fávero, 2017). This was associated with the high sense of low self-esteem and regret observed with the loss compared to the pleasure obtained from receiving again.…”

Section: The Finance Behavioral and Prospect Theorymentioning

confidence: 99%

The Financial Behavior of Investment Decision Making Between Real and Financial Assets Sectors

Hala¹,

Abdullah²,

Andayani³

et al. 2020

JAFEB

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This research was conducted to achieve several objectives and focus research was based on financial behavior theory and prospect theory as grounded theory e.g., investigate the financial decision-making behavior between financial and real assets investment, and confirm the relationship existing between herding behavior and overconfidence factors to the level of loss and regret aversion, and financial literacy into real assets investment decisions. The study used 220 real estate auction respondents as investor samples at the State Assets and Auction Service Office Makassar, South Sulawesi, Indonesia. Data was collected through the use of a questionnaire consisting of 23 questions to measure the variables. Moreover, the research data passed through several feasibility tests like the inner and outer modeling by Partial Least Square-Structural equation model (PLS-SEM) while the hypotheses formulated were also tested to determine the magnitude of the variable relationship. Through the use of the direct and intervening test, loss and regret aversion variables have a positive and significant effect while financial literacy variables have no significant effect. There is a slight difference in the decision-making process for real assets and financial assets investors. Investment decision making behavior in the financial assets sector requires less complicated decisions compared to the decisions related to real assets investments.

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Section: The Finance Behavioral and Prospect Theorymentioning

confidence: 99%

The Financial Behavior of Investment Decision Making Between Real and Financial Assets Sectors

Hala¹,

Abdullah²,

Andayani³

et al. 2020

JAFEB

View full text Add to dashboard Cite

show abstract

“…Prospect theory of Daniel Kahneman & Tversky (2013) Depicted in a hypothetical value function, which explains the role of values based on the deviation of the reference point, namely gain and loss. loss position has a more significant influence in terms of psychology than when in an area of gain (Braga & Fávero, 2017). Because loss significantly affects a sense of low self-esteem, regret is very high compared to the pleasure of receiving again.…”

Section: Behavior Finance and Prospect Theory As Grounded Theorymentioning

confidence: 99%

Antecedents and Consequences of Psychological Aspects of Investors in the Real Asset Sector Towards Investment Decision Making

Yuniningsih

Santoso

2021

ATESTASI

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Purpose: This research is pursued at several points objectiveness: 1). Does the behavior of financial decision making on financial asset investors also apply the same to real asset investors. 2). By the empirically, this study is to test and confirm the relationship of herding and overconfidence factors to the level of loss aversion, regret aversion, financial literacy in making real asset investment decisions. Methodology: Involved 105 real estate auction investors as samples at the State Assets and Auction Service Office (KPKNL) Sidoarjo, East Java, Indonesia. Collecting data using a questionnaire consisting of 23 questions for measurement the variabel. Testing research data passes several feasibility tests, such as Inner and outer test modelling by PLS and hypothesis test to see the magnitude of the coefficient of relationship Result and Findings: Loss and regret aversion variables through direct and intervening testing have a positive and significant effect, but financial literacy variables, both through direct and intervening testing, are stated to have no significant effect. There are different aspects of the psychology of investment decision making between investors in the financial sector and investors in the real asset sector. The most striking difference is the consideration of information, opportunities and real assets turnover which will be resold after winning the auction.

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“…We utilize an adapted version of the Balloon Analog Risk Task (BART; Lejuez et al., 2003). This task has been used to assess risk taking in a more naturalistic setting than the usual assessment using monetary gambling (Braga & Fávero, 2017).…”

Section: Studymentioning

confidence: 99%

Culture, Thinking Styles and Investment Decision

Wang

Cao

et al. 2021

Psychol Rep

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Past research suggests that people with different thinking styles show different cognitive processes. Accordingly, we test how thinking style and advice jointly affect investment decision. We conduct three experiments with 530 participants. In Study 1, coin, card and stamp investors who had high levels of holistic thinking and made decisions on their own obtained the lowest returns. In Study 2, participants who used analytic thinking to make decisions on their own in the Balloon Analog Risk Task (BART) earned the most. In Study 3, Westerners who made decisions on their own using analytic thinking had the highest incomes, while Easterners using holistic thinking and listening to others also had positive returns. The results support the framing effect in investment decisions, and the two simulation paradigms are presented for future studies and to confirm the impacts of thinking styles.

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Disposition Effect and Tolerance to Losses in Stock Investment Decisions: An Experimental Study

Cited by 16 publications

References 20 publications

The Financial Behavior of Investment Decision Making Between Real and Financial Assets Sectors

The Financial Behavior of Investment Decision Making Between Real and Financial Assets Sectors

Antecedents and Consequences of Psychological Aspects of Investors in the Real Asset Sector Towards Investment Decision Making

Culture, Thinking Styles and Investment Decision

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