Majandusteaduskonna teadusseminar "A Closer Look at the Disposition Effect: Speculating in Gains, Waiting in Losses" 16. oktoobril
Seminar of the Economics Departments at TSEBA” on Wednesday 16 October, 16:00-17:00 in room X-218: Tõnn Talpsepp, TSEBA, will present his recent paper: A Closer Look at the Disposition Effect: Speculating in Gains, Waiting in Losses.
Abstract: Investors tend to hold loser stocks too long and sell winner stocks too soon, which is referred to as the disposition effect. Using the laboratory experiments as well as the trading data from Estonian stock market, we find that investment decisions depend on the current performance and the past price movement. In the experiment, the participants appear to stay with their last period allocations if they had losses on investments, whereas they follow more active contrarian strategies if they had made positive profits. The trading behavior of investors in Estonian stock market are mostly consistent with our experimental results, i.e., contrarian strategies in gains and holding stocks in losses. Our experiment suggests that wishful thinking and misperception of the price process, such as gambler's fallacy, may attribute to the observed disposition effect.
Keywords: Disposition effect, Housemoney effect prospect theory, portfolio choice, experimental finance.
The seminar is held in English. Copies of the paper will be available at the seminar.
Everyone is welcome. Please feel free to share this invitation!
Questions regarding the seminar can be addressed to Liis Saks, liis dot saks at ttu dot ee