 The house money and break-even effects for different types of traders: Evidence from Taiwan futures marketsYu Chuan Huang and Shu Hui Chan Pacific-Basin Finance Journal, 2014, vol. 26, issue C, 1-13 Abstract: Using a set of transaction records from the Taiwan Futures Exchange, we examine risk-taking behavior subject to prior outcomes and study the house money and break-even effects across various trader types. The empirical results show that the degree of morning gains/losses nonlinearly influences afternoon risk taking for all trader types, but the pattern is different for each type. Active individuals exhibit a house money effect after experiencing large gains and exhibit a break-even effect after large and small losses. Futures proprietary firms exhibit a break-even effect only after experiencing large morning losses. By contrast, foreign institutions exhibit only a house money effect after they experience small gains. The additional risk-seeking behaviors of futures proprietary firms and foreign institutions do not have a significant influence on market volatility or liquidity; only active individuals' risk-seeking behaviors when facing large morning losses impact both market volatility and liquidity. Keywords: House money effect; Break-even effect; Risk-taking behavior (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:26:y:2014:i:c:p:1-13 DOI: 10.1016/j.pacfin.2013.10.008 Access Statistics for this article Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee More articles in Pacific-Basin Finance Journal from Elsevier |
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