The disposition effect when deciding on behalf of others
Oliver Musshoff () and
Holger A. Rau
Journal of Economic Psychology, 2019, vol. 74, issue C
This article presents experimental evidence on the disposition effect for the case where a subject decides on behalf of another person. In our setting, trading effort can only be affected by subjects’ intrinsic motivation, since trading actions only influence the profits of a matched person. However, in our control treatment, trades have a direct influence on subjects’ profits. We find that trading on behalf of others amplifies disposition effects when subjects have no experience. By contrast, no significant differences exist when subjects are experienced. Inexperienced subjects, characterized by a greater concern for others, cause this treatment effect. Thus, trading responsibility results in an emotional burden for subjects without experience and this leads to weak trading performance. Our findings add interesting insights for management practices in delegated decisions, as they highlight that when investors are inexperienced, prosociality may hinder trading efficiency.
Keywords: Disposition effect; Experiment; Decisions on behalf of others; Social value orientation; Loss aversion (search for similar items in EconPapers)
JEL-codes: C91 D14 D81 G41 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: The disposition effect when deciding on behalf of others (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:74:y:2019:i:c:s0167487019300935
Access Statistics for this article
Journal of Economic Psychology is currently edited by G. Antonides and D. Read
More articles in Journal of Economic Psychology from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().