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The disposition effect and investor experience

Newton Da Costa, Marco Goulart, César Cupertino (), Jurandir Macedo and Sergio Da Silva ()

Journal of Banking & Finance, 2013, vol. 37, issue 5, 1669-1675

Abstract: We examine whether investing experience can dampen the disposition effect, that is, the fact that investors seem to hold on to their losing stocks to a greater extent than they hold on to their winning stocks. To do so, we devise a computer program that simulates the stock market. We use the program in an experiment with two groups of subjects, namely experienced investors and undergraduate students (the inexperienced investors). As a control procedure, we consider random trade decisions made by robot subjects. We find that though both human subjects show the disposition effect, the more experienced investors are less affected.

Keywords: Disposition effect; Investor experience; Artificial stock market; Framed field experiment (search for similar items in EconPapers)
JEL-codes: G11 G14 (search for similar items in EconPapers)
Date: 2013
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