Peer attention and the disposition effect

Minh-Lý Liêu ()
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Minh-Lý Liêu: University of Paderborn

No 81, Working Papers Dissertations from Paderborn University, Faculty of Business Administration and Economics

Abstract: Social trading platforms allow investors to interact with each other. This paper studies the impact of peer attention on social trading platforms on investors' disposition effect. Using a difference-in-differences approach, I find a significant increase in the disposition effect when investors receive attention from their peers. This disposition effect increases as the number of other investors distributing likes to one another's trading decisions increases. This effect is driven both by holding on to losing positions longer and by closing winning positions faster. This finding may be explained by social facilitation theory. In the presence of others, investors want to achieve superior outcomes and limit their losses.

Keywords: Social trading; transparency; disposition effect; online trading platforms. (search for similar items in EconPapers)
JEL-codes: D14 G11 G23 G24 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2021-07
New Economics Papers: this item is included in nep-cwa, nep-mst and nep-ure
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