Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5089461 | Journal of Banking & Finance | 2013 | 7 Pages |
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.
⺠We examine whether investor experience can dampen the disposition effect. ⺠We devise a computer program that simulates the stock market. ⺠We use the program in an experiment with experienced investors and undergraduate students. ⺠As a control procedure, we consider random trade decisions made by robot subjects. ⺠We find that though both human subjects show the disposition effect, the more experienced investors are less affected.