An experimental examination of the house money effect in a multi-period setting

Lucy F. Ackert (), Narat Charupat, Bryan K. Church, James Tompkins and Richard Deaves

No 2003-13, Working Paper from Federal Reserve Bank of Atlanta

Abstract: There is evidence that risk-taking behavior is influenced by prior monetary gains and losses. When endowed with house money, people become more risk taking. This paper is the first to report a house money effect in a dynamic, financial setting. Using an experimental method, the authors compare market outcomes across sessions that differ in the level of cash endowment (low and high). Their experimental results provide strong support for a house money effect. Traders' bids, price predictions, and market prices are influenced by the amount of money that is provided prior to trading. However, dynamic behavior is difficult to interpret due to conflicting influences.

Keywords: Financial markets; Investments; Risk (search for similar items in EconPapers)
Date: 2003
View citations in EconPapers

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: An experimental examination of the house money effect in a multi-period setting (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:fip:fedawp:2003-13

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper from Federal Reserve Bank of Atlanta
Contact information at EDIRC.
Series data maintained by Diane Rosenberger ().