Sense of Control Affects Investment Behavior

King King Li

No 2010-004, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: Preference for control affects investment behavior. Participants of laboratory experiments invest different amount of money in a risky asset when face with two different methods of control which have identical payoff structure and probability distribution, but provide different sense of control. Preference for controlling and not controlling are both observed. Participants increase their investment when their preferred method of control is used. Participants who prefer to control more reduce their investment more strongly when face with less control. Preference for control has larger effect on investment behavior when participants are induced to have a comparative mindset rather than non-comparative mindset.

Keywords: Preference for control; sense of control; risk attitudes; illusion of control; source preference; portfolio choice; behavioral finance; comparative mindset; non-comparative mindset (search for similar items in EconPapers)
JEL-codes: B49 C91 D81 G11 G19 (search for similar items in EconPapers)
Date: 2010-01-20
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-upt
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Citations: View citations in EconPapers (2)

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