Investment Performance and Emotions: An International Study

Studies in Economics and Finance, (2018), Volume 36, 32-50

29 Pages Posted: 4 Jan 2014 Last revised: 26 Sep 2021

See all articles by Guy Kaplanski

Guy Kaplanski

Bar-Ilan University - Graduate School of Business Administration

Haim Levy

Hebrew University of Jerusalem - Jerusalem School of Business Administration; Fordham University

Date Written: January 1, 2018

Abstract

Hypothetical stock market investment experiment in six countries reveals that after controlling for the average profit in the whole stock market subjects prefer losing money rather than gaining money as long as their so-called "friends" lose more money. The sad result is that only 8.2% of the subjects either ignore the peer group’s investment performance, as advocated by the classic univariate expected utility paradigm, or exhibit a consistently favorable response toward their friends, which is a necessary condition for the existence of altruism. The hostility of subjects toward their friends is greater in less wealthy countries. We provide some possible explanations for these results.

Keywords: Investors' Economic Rationality, Altruism, Friendship, Bivariate Preference

JEL Classification: A13, D01, D03, G02, G11

Suggested Citation

Kaplanski, Guy and Levy, Haim, Investment Performance and Emotions: An International Study (January 1, 2018). Studies in Economics and Finance, (2018), Volume 36, 32-50, Available at SSRN: https://ssrn.com/abstract=2374435 or http://dx.doi.org/10.2139/ssrn.2374435

Guy Kaplanski (Contact Author)

Bar-Ilan University - Graduate School of Business Administration ( email )

Ramat Gan
Israel

Haim Levy

Hebrew University of Jerusalem - Jerusalem School of Business Administration ( email )

Mount Scopus
Jerusalem, 91905
Israel

HOME PAGE: http://pluto.huji.ac.il/~mshlevy/

Fordham University ( email )

140 West 62nd Street
New York, NY 10023
United States

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