How Do Limit Orders Affect the Disposition Effect on Highly Liquid Markets – Experimental Finance Evidence

Dvořáčková, Hana; Tichý, Tomáš; Jochec, Marek

doi:10.1080/15427560.2021.1973006

Cited by 2 publications

(2 citation statements)

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“…Some DSS suggest personalized warnings based on an understanding of the user (Bhandari & Hassanein, 2012; George et al, 2000), in line with Fischoff's (1981) debiasing design; others rely on a set of rules and disregard personalisation (Otuteye & Siddiquee, 2015). Stop‐loss orders might also be a useful rule to limit investor exposure to bias (Dvorackova et al, 2021; Nolte, 2012; Richards et al, 2017). Stop losses have been found to be effective in mitigating the disposition effect (Dvorackova et al, 2021; Richards et al, 2017), which could be useful for inexperienced traders in mitigating bias.…”

Section: Resultsmentioning

confidence: 99%

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Towards an integrated debiasing framework for consumer financial decisions: A reflection on debiasing research

Jugnandan

Willows

2023

Int J Consumer Studies

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Consumers are subject to cognitive biases, which impede the rationality of their financial decisions. This is problematic, given the onus on the individual to make investment and savings decisions. Thus, there is an impetus for research to identify mitigation strategies. This qualitative review surveys the debiasing literature to identify the prevalent debiasing approaches and proposes an integrated model towards debiasing. The identified core debiasing strategies (education and training, decision support systems, information aspects, experience, and financial advice) are organized and integrated into a single model using the 'Antecedents, Decisions, Outcomes' format developed by Paul and Benito. We also propose an agenda for future debiasing research.

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Section: Resultsmentioning

confidence: 99%

“…Stop‐loss orders might also be a useful rule to limit investor exposure to bias (Dvorackova et al, 2021; Nolte, 2012; Richards et al, 2017). Stop losses have been found to be effective in mitigating the disposition effect (Dvorackova et al, 2021; Richards et al, 2017), which could be useful for inexperienced traders in mitigating bias.…”

Section: Resultsmentioning

confidence: 99%