Framing Effects on Selected Information and Market Behavior - an Experimental Analysis

The Journal of Behavioral Finance, Vol. 6, No. 2, pp. 90-100, 2005

Posted: 18 Mar 2002 Last revised: 6 Feb 2013

Erich Kirchler

University of Vienna - Faculty of Psychology

Martin Weber

University of Mannheim - Department of Banking and Finance

Boris Maciejovsky

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics

Date Written: 2005

Abstract

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

Suggested Citation

Kirchler, Erich and Weber, Martin and Maciejovsky, Boris, Framing Effects on Selected Information and Market Behavior - an Experimental Analysis (2005). The Journal of Behavioral Finance, Vol. 6, No. 2, pp. 90-100, 2005. Available at SSRN: https://ssrn.com/abstract=303386 or http://dx.doi.org/10.2139/ssrn.303386

Erich Kirchler (Contact Author)

University of Vienna - Faculty of Psychology ( email )

Universitaetsstrasse 7
Vienna, A-1010
Austria
+43 1 42 7747332 (Phone)
+43 1 42 7747339 (Fax)

HOME PAGE: http://homepage.univie.ac.at/erich.kirchler

Martin Weber

University of Mannheim - Department of Banking and Finance ( email )

D-68131 Mannheim
Germany
+49 621 181 1532 (Phone)
+49 621 181 1534 (Fax)

Boris Maciejovsky

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany
+49 3641 686626 (Phone)
+49 3641 686623 (Fax)

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