The disposition effect and investor experience

Da Costa Jr, Newton and Goulart, Marco and Cupertino, Cesar and Macedo Jr, Jurandir and Da Silva, Sergio (2013): The disposition effect and investor experience.

Abstract

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Disposition effect; Investor experience; Artificial stock market; Framed field experiment
• Subjects: G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice ; Investment Decisions; C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C93 - Field Experiments

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