Financial attention and the disposition effect
Koen Inghelbrecht and
Journal of Economic Behavior & Organization, 2019, vol. 163, issue C, 190-217
Using a novel brokerage dataset covering individual investors’ login and stock trading behavior, we investigate the severity of the disposition effect as a function of attention. Our results show that more attentive investors trade less in line with the disposition effect, suggesting a comparative advantage in incorporating information into financial decision making. Furthermore, we find that high attention is related to a stronger tendency to sell moderate losses, as compared to large ones, while low attention increases an investor’s likelihood to sell extreme, rather than moderate, profits. These results are in line with the theory of cognitive dissonance and saliency effects.
Keywords: Investor behavior; Disposition effect; Attention allocation (search for similar items in EconPapers)
JEL-codes: G11 G41 (search for similar items in EconPapers)
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Working Paper: FINANCIAL ATTENTION AND THE DISPOSITION EFFECT (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:163:y:2019:i:c:p:190-217
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