Proceedings of the 9th Joint International Conference on Information Sciences (JCIS-06)

The Influence of Investor Psychology on Disposition Effect

Authors
Shu Chun Hsiao, Sun Pi-Chuan
Corresponding Author
Shu Chun Hsiao
Available Online October 2006.
DOI
https://doi.org/10.2991/jcis.2006.96How to use a DOI?
Keywords
Disposition effect, Overconfidence, Mental Accounting, Self-Control
Abstract

In 1980s, many empirical researches’ findings (i.e., Shiller(1984), Thaler (1985) et al. ) did not support efficient market hypothesis (EMH). Previous studies (e.g., Bernartzi and Thaler, 1995) related to behavioral model suggest that certain market anomalies are consistent with the presence of irrational trades by investors. Kahneman and Tversky (1979) proposed the prospect theory as an alternative to expected utility in describing investor behavior. Based on previous works (Lichtenstein, Fischhoff and Phillips, 1982; Shefrin and Statman, 1985) this research examined the influences of overconfidence, mental accounting, regret aversion and self-control on the disposition effect of selling winners too early and holding losers too long. The results of empirical data analysis of 290 investors indicate that all four psychological factors have significant influences on the disposition effect. The findings show that (1) overconfidence, mental accounting and self- control positively influence the disposition effect, and (2) self-control negatively influences the disposition effect. As predicted, self control can reduce irrational behavior of investor.

Copyright
© 2006, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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Volume Title
Proceedings of the 9th Joint International Conference on Information Sciences (JCIS-06)
Series
Advances in Intelligent Systems Research
Publication Date
October 2006
ISBN
978-90-78677-01-7
ISSN
1951-6851
DOI
https://doi.org/10.2991/jcis.2006.96How to use a DOI?
Copyright
© 2006, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Cite this article

TY  - CONF
AU  - Shu Chun Hsiao
AU  - Sun Pi-Chuan
PY  - 2006/10
DA  - 2006/10
TI  - The Influence of Investor Psychology on Disposition Effect
BT  - Proceedings of the 9th Joint International Conference on Information Sciences (JCIS-06)
PB  - Atlantis Press
SN  - 1951-6851
UR  - https://doi.org/10.2991/jcis.2006.96
DO  - https://doi.org/10.2991/jcis.2006.96
ID  - Hsiao2006/10
ER  -