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Propensity to sell stocks in an artificial stock market
This experimental study of an artificial stock market investigates what explains the propensity to sell stocks and thus the disposition effect. It is a framed field experiment that follows the steps of a previous observational study of investor behavior in the Finnish stock market. Our experimental...
Autores principales: | , , , |
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Formato: | Online Artículo Texto |
Lenguaje: | English |
Publicado: |
Public Library of Science
2019
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Materias: | |
Acceso en línea: | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6483348/ https://www.ncbi.nlm.nih.gov/pubmed/31022264 http://dx.doi.org/10.1371/journal.pone.0215685 |
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author | Prates, Wlademir Da Costa, Newton Armada, Manuel Rocha Da Silva, Sergio |
author_facet | Prates, Wlademir Da Costa, Newton Armada, Manuel Rocha Da Silva, Sergio |
author_sort | Prates, Wlademir |
collection | PubMed |
description | This experimental study of an artificial stock market investigates what explains the propensity to sell stocks and thus the disposition effect. It is a framed field experiment that follows the steps of a previous observational study of investor behavior in the Finnish stock market. Our experimental approach has an edge over the observational study in that it can control extraneous variables and two or more groups can be compared. We consider in particular the groups of amateur students and professional investors because it is well established in the literature that the disposition effect is less pronounced in professionals. The disposition effect was measured by both the traditional metric and a broader one that properly considers return intervals. A full logit model with control variables was employed in the latter case. As a result, we replicate for the broader definition what already has been found for the traditional measure: that investor experience dampens the disposition effect. Trades with positive returns exhibited higher propensity to sell than trades with negative returns. For the overall sample of participants, we find the disposition effect cannot be explained by prospect theory, but we cast doubt on this stance from partitions of data from amateurs and professionals. |
format | Online Article Text |
id | pubmed-6483348 |
institution | National Center for Biotechnology Information |
language | English |
publishDate | 2019 |
publisher | Public Library of Science |
record_format | MEDLINE/PubMed |
spelling | pubmed-64833482019-05-09 Propensity to sell stocks in an artificial stock market Prates, Wlademir Da Costa, Newton Armada, Manuel Rocha Da Silva, Sergio PLoS One Research Article This experimental study of an artificial stock market investigates what explains the propensity to sell stocks and thus the disposition effect. It is a framed field experiment that follows the steps of a previous observational study of investor behavior in the Finnish stock market. Our experimental approach has an edge over the observational study in that it can control extraneous variables and two or more groups can be compared. We consider in particular the groups of amateur students and professional investors because it is well established in the literature that the disposition effect is less pronounced in professionals. The disposition effect was measured by both the traditional metric and a broader one that properly considers return intervals. A full logit model with control variables was employed in the latter case. As a result, we replicate for the broader definition what already has been found for the traditional measure: that investor experience dampens the disposition effect. Trades with positive returns exhibited higher propensity to sell than trades with negative returns. For the overall sample of participants, we find the disposition effect cannot be explained by prospect theory, but we cast doubt on this stance from partitions of data from amateurs and professionals. Public Library of Science 2019-04-25 /pmc/articles/PMC6483348/ /pubmed/31022264 http://dx.doi.org/10.1371/journal.pone.0215685 Text en © 2019 Prates et al http://creativecommons.org/licenses/by/4.0/ This is an open access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. |
spellingShingle | Research Article Prates, Wlademir Da Costa, Newton Armada, Manuel Rocha Da Silva, Sergio Propensity to sell stocks in an artificial stock market |
title | Propensity to sell stocks in an artificial stock market |
title_full | Propensity to sell stocks in an artificial stock market |
title_fullStr | Propensity to sell stocks in an artificial stock market |
title_full_unstemmed | Propensity to sell stocks in an artificial stock market |
title_short | Propensity to sell stocks in an artificial stock market |
title_sort | propensity to sell stocks in an artificial stock market |
topic | Research Article |
url | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6483348/ https://www.ncbi.nlm.nih.gov/pubmed/31022264 http://dx.doi.org/10.1371/journal.pone.0215685 |
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