Reference point formation: Does the market whisper in the background?

Tianyang Wang (), Robert G. Schwebach and Sriram V. Villupuram

Journal of Financial Research, 2022, vol. 45, issue 2, 384-421

Abstract: Well‐established studies in behavioral finance confirm that investors are highly influenced by subjective reference points when making economic decisions. Although the literature examines reference point formation for individual stocks based on observed price sequences, the stocks are often treated without considering market context. We extend this literature by incorporating market price information as background to the behavior experiment, and we consider both prospect theory and anticipation/disappointment‐based utility functions in a combined framework to investigate the impact of market context on reference point formation. Our article provides new evidence and insights for investment practitioners and behavioral researchers.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1111/jfir.12278

Related works:
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: https://EconPapers.repec.org/RePEc:bla:jfnres:v:45:y:2022:i:2:p:384-421

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0270-2592

Access Statistics for this article

Journal of Financial Research is currently edited by Jayant Kale and Gerald Gay

More articles in Journal of Financial Research from Southern Finance Association Contact information at EDIRC., Southwestern Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().