Numerical Information Format and Investment Decisions: Implications for the Disposition Effect and the Status Quo Bias

Rubaltelli, Enrico; Rubichi, Sandro; Savadori, Lucia; Tedeschi, Marcello; Ferretti, Riccardo

doi:10.1207/s15427579jpfm0601_4

Cited by 36 publications

(20 citation statements)

References 12 publications

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“…A few studies (Weber and Camerer, 1998;Fogel and Berry, 2006;Wong et al, 2006;Rubaltelli et al, 2005) used primary data through experiments to analyse the disposition effect.…”

Section: Dominance Of Secondary Data-based Empirical Researchmentioning

confidence: 99%

Behavioural biases in investment decision making – a systematic literature review

Kumar

Goyal

2015

Qualitative Research in Financial Markets

236

202

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Access to this document was granted through an Emerald subscription provided by 405387 [] For AuthorsIf you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to systematically review the literature published in past 33 years on behavioural biases in investment decision-making. The paper highlights the major gaps in the existing studies on behavioural biases. It also aims to raise specific questions for future research. Design/methodology/approach -We employ systematic literature review (SLR) method in the present study. The prominence of research is assessed by studying the year of publication, journal of publication, country of study, types of statistical method, citation analysis and content analysis on the literature on behavioural biases. The present study is based on 117 selected articles published in peerreview journals between 1980 and 2013. Findings -Much of the existing literature on behavioural biases indicates the limited research in emerging economies in this area, the dominance of secondary data-based empirical research, the lack of empirical research on individuals who exhibit herd behaviour, the focus on equity in home bias, and indecisive empirical findings on herding bias. Research limitations/implications -This study focuses on individuals' behavioural biases in investment decision-making. Our aim is to analyse the impact of cognitive biases on trading behaviour, volatility, market returns and portfolio selection. Originality/value -The paper covers a considerable period of time . To the best of authors' knowledge, this study is the first using systematic literature review method in the area of behavioural finance and also the first to examine a combination of four different biases involved in investment decision-making. This paper will be useful to researchers, academicians and those working in the area of behavioural finance in understanding the impact of behavioural biases on investment decision-making.

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“…A few studies (Weber and Camerer, 1998;Fogel and Berry, 2006;Wong et al, 2006;Rubaltelli et al, 2005) used primary data through experiments to analyse the disposition effect.…”

Section: Dominance Of Secondary Data-based Empirical Researchmentioning

confidence: 99%

Behavioural biases in investment decision making – a systematic literature review

Kumar

Goyal

2015

Qualitative Research in Financial Markets

236

202

View full text Add to dashboard Cite

show abstract

“…Within the domain of investing literacy, previous studies have measured confidence indirectly by operationalizing confidence as different outcomes across experimental conditions (e.g., Rubaltelli, Rubichi, Savadori, Tedeschi, & Ferretti, 2005), or by inferring confidence from observations of brokerage account activity (e.g., Odean, 1999). Metacognitive skill in accurately assessing the level of one's performance distinguishes the competent from the incompetent (Kruger & Dunning, 1999).…”

Section: Investment Literacy Surveysmentioning

confidence: 99%

Confidence mediates how investment knowledge influences investing self-efficacy

Forbes

Kara

2010

Journal of Economic Psychology

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“…Unless investors perform due diligence to understand what information cues to examine, how to detect their quality, how to interpret them, and what actions to take (if any), information may be of little value (Mackay & Elam, 1992). Disturbingly, the majority of online investors are not well versed in financial matters (Carlson, 2005; Rubaltelli et al, 2005), meaning that the average user is highly susceptible to an illusion of knowledge.…”

Section: Background and Theorymentioning

confidence: 99%

“…As a result of online investing, the proportion of naïve investors in the market has increased considerably (Ahmed, Schnieble, & Stephens, 2003), meaning that many online investors are not well equipped to handle financial matters (Carlson, 2005; Rubaltelli et al, 2005) or to make quality investment decisions. In fact, this article argues that online technologies can induce individuals to overestimate their abilities, resulting in excessively upbeat expectations.…”

Section: Introductionmentioning

confidence: 99%

Paradoxes of Online Investing: Testing the Influence of Technology on User Expectancies*

Looney¹,

Valacich²,

Todd³

et al. 2006

Decision Sciences

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At an increasing rate, individual investors are taking personal control over their financial destinies by investing their money online. Compared to offline do-it-yourself approaches, evidence suggests that investors exhibit lofty expectations and perform significantly worse after going online. However, little is understood about the mechanisms fueling expectancies, the role technologies play in their formation, or how technologies shape investment decisions. Therefore, this article explores the paradoxical nature of online investing technologies, which can give rise to a heightened state of conviction in one's capability to invest successfully. Drawing on Social Cognitive Theory, the concepts of encapsulation and combination are introduced to develop a research model describing how functional and technical self-efficacy judgments independently and collectively shape and influence outcome expectancies. The results suggest that perceptions about what one can accomplish through online investing technologies can lead investors to exaggerate their capabilities, which, in turn, produces elevated expectancies of financial payoffs and nonmonetary rewards. These findings carry important implications. In tasks requiring both computing and functional skills, the principals of encapsulation and combination highlight the importance of comprehensively capturing self-efficacy * This article is dedicated in memory of the first author's father, Arlen B. Looney, Jr., who recently lost his long and heroic battle with cancer. We thank the College of Business and Economics at Washington State University and the McIntire School of Commerce at the University of Virginia, who provided resources and funding for this research. We sincerely appreciate the insightful comments of the editors and reviewers on earlier versions of this manuscript. † Corresponding author. 206Paradoxes of Online Investing beliefs across skill domain boundaries. Moreover, online investing represents a paradoxical case that challenges the traditional assumption that fostering a robust sense of efficacy represents a purely noble enterprise. In fact, strong self-efficacy beliefs can prove counterproductive, leading to severe, irreversible, and unintended consequences. Going forward, these discoveries provide a solid foundation to enhance systems designs and facilitate a deeper understanding of user psychology.

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Numerical Information Format and Investment Decisions: Implications for the Disposition Effect and the Status Quo Bias

Cited by 36 publications

References 12 publications

Behavioural biases in investment decision making – a systematic literature review

Behavioural biases in investment decision making – a systematic literature review

Confidence mediates how investment knowledge influences investing self-efficacy

Paradoxes of Online Investing: Testing the Influence of Technology on User Expectancies*

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