Framing Effects on Selected Information and Market Behavior - an Experimental Analysis
University of Vienna - Department of Psychology
University of Mannheim - Department of Banking and Finance
Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics
The Journal of Behavioral Finance, Vol. 6, No. 2, pp. 90-100, 2005
The results of an asset market experiment, in which 64 subjects trade two assets on eight markets in a computerized continuous double auction, indicate that (i) objectively irrelevant information influences trading behavior. Moreover, positively and negatively framed information leads to a particular trading pattern. However (ii), a probability variation of the framed information has no influence on trading volume. In addition, the results (iii) confirm the disposition effect. Participants who experience a gain sell their assets more rapidly than participants who experience a loss, and positively framed subjects generally sell their assets later than negatively framed subjects.
Keywords: Financial markets, Prospect theory, Anchoring and adjustment, Experimental economics, Disposition effect
JEL Classification: C90, D44, D80, G12
Date posted: March 18, 2002 ; Last revised: February 6, 2013
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