Financial Attitudes, Behaviours, and the Disposition Effect

54 Pages Posted: 13 Mar 2019

See all articles by Marc Wierzbitzki

Marc Wierzbitzki

WHU - Otto Beisheim School of Management

Sebastian Seidens

WHU - Otto Beisheim School of Management

Markus Rudolf

WHU Otto Beisheim Graduate School of Management

Date Written: February 21, 2019

Abstract

It has been widely studied that investors suffer from the tendency to realize gains too quickly, while carrying losses too long --- also known as the disposition effect. Previous research on the phenomenon finds that there is a substantial heterogeneity with regards to the magnitude of investors' disposition effects. In this regard, we conduct an experiment in order to relate the disposition effect to subjects' self-stated financial attitudes and behaviours. We find that US investors' financial attitudes and behaviours can be captured by the following four dimensions: "financial planning," "anxiety," "interest in financial issues," and "impulsive financial decision-making." Furthermore, these dimensions reveal that investors who focus more on the long-term implications of their financial decisions exhibit lower disposition effects on average.

Keywords: disposition effect, experimental finance, financial attitudes and behaviour

JEL Classification: D12, D14, G11, G41

Suggested Citation

Wierzbitzki, Marc and Seidens, Sebastian and Rudolf, Markus, Financial Attitudes, Behaviours, and the Disposition Effect (February 21, 2019). Available at SSRN: https://ssrn.com/abstract=3339102 or http://dx.doi.org/10.2139/ssrn.3339102

Marc Wierzbitzki (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Sebastian Seidens

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Markus Rudolf

WHU Otto Beisheim Graduate School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany
+49-(0)261-6509-420 (Phone)

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