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The Disposition Effect in Team Investment Decisions: Experimental Evidence

33 Pages Posted: 25 Feb 2013 Last revised: 26 Oct 2015

Holger Andreas Rau

University of Göttingen

Date Written: September 2015


This paper experimentally studies the disposition effects of teams and individuals. The disposition effect describes the phenomenon that investors are reluctant to realize losses, whereas winners are sold too early. Our experiments compare the investments of two-person teams to a setting where investors trade alone. We find that subjects investing jointly exhibit more pronounced disposition effects than individuals. A closer look reveals that investor teams hardly realize losses and predominately sell winners. The data suggest that decision-dependent emotions may explain the differences. That is, teams reporting high levels of regret exhibit significantly higher disposition effects than individuals.

Keywords: Decision-dependent emotions, Disposition Effect, Experiment, Team Decision Making

JEL Classification: C92, D70, G12

Suggested Citation

Rau, Holger Andreas, The Disposition Effect in Team Investment Decisions: Experimental Evidence (September 2015). Journal of Banking and Finance, Forthcoming. Available at SSRN: or

Holger Andreas Rau (Contact Author)

University of Göttingen ( email )

Platz der Göttinger Sieben 3
Göttingen, Niedersachsen 37073

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