Losers, Winners and Biased Trades

Journal of Consumer Research, Vol. 32, No. 2, 2005

6 Pages Posted: 1 Jun 2006

See all articles by Gerard J. Tellis

Gerard J. Tellis

University of Southern California - Marshall School of Business, Department of Marketing

Deborah J. MacInnis

University of Southern California - Marketing Department

Joseph Johnson

University of Miami - Department of Marketing

Abstract

When faced with sequential information, consumers tend to fall prey to one of two well-known heuristics: the hot (or cold) hand and the gambler's fallacy. The authors relate these two traditionally separate heuristics to differences in accepting (buy) versus rejecting (sell) decisions. They identify trend length as a contextual moderating variable and show an asymmetry between buying and selling frames. When applied to a stock market context, a consistent finding is that consumers prefer to buy past winners and sell past losers even when neither should be preferred. This behavior violates the normative rule of buy low and sell high.

Keywords: consumer behavior, markets, informational biases

Suggested Citation

Tellis, Gerard J. and MacInnis, Deborah J. and Johnson, Joseph, Losers, Winners and Biased Trades. Journal of Consumer Research, Vol. 32, No. 2, 2005. Available at SSRN: https://ssrn.com/abstract=905552

Gerard J. Tellis

University of Southern California - Marshall School of Business, Department of Marketing ( email )

Hoffman Hall 701
Los Angeles, CA 90089-0443
United States
213-740-5031 (Phone)
213-740-7828 (Fax)

HOME PAGE: http://gtellis.net

Deborah J. MacInnis (Contact Author)

University of Southern California - Marketing Department ( email )

Hoffman Hall 701
Los Angeles, CA 90089-1427
United States

Joseph Johnson

University of Miami - Department of Marketing ( email )

United States

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