Winners, Losers, and Others in Investment Competition – Experimental Study

16 Pages Posted: 2 Sep 2023

See all articles by Zvika Afik

Zvika Afik

Ben Gurion University

Hofit Hamrani Dafna

Ben-Gurion University of the Negev

Yaron Lahave

Ben-Gurion University of the Negev

Abstract

We report the results of lab experiments on investment competition, where all subjects receive their accumulated earnings and the subject with the highest returns earns an additional bonus. We find that ranking is negatively correlated with portfolio risk: when subjects realize that their rank is relatively low, they increase their portfolio risk. This behavior is shared by all subjects in all ranking during all trade periods, and regardless of the risk-free rate

Keywords: Investment Competition, investment decision, Portfolio Choice, Portfolio Risk, Ranking, Relative Performance

Suggested Citation

Afik, Zvika and Hamrani Dafna, Hofit and Lahave, Yaron, Winners, Losers, and Others in Investment Competition – Experimental Study. Available at SSRN: https://ssrn.com/abstract=4560089 or http://dx.doi.org/10.2139/ssrn.4560089

Zvika Afik (Contact Author)

Ben Gurion University ( email )

Hofit Hamrani Dafna

Ben-Gurion University of the Negev ( email )

1 Ben-Gurion Blvd
Beer-Sheba 84105, 84105
Israel

Yaron Lahave

Ben-Gurion University of the Negev ( email )

1 Ben-Gurion Blvd
Beer-Sheba 84105, 84105
Israel

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