International Journal of Business and Economics Research

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The Escalation of Commitment and Disposition Effect in Securities Trading: An Experimental Study

Received: 25 December 2017    Accepted: 11 January 2018    Published: 23 January 2018
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Abstract

This paper investigates the relationship between disposition effect and escalation of commitment in securities trading. First, we developed an investment simulation system, that manipulated five stocks' price during thirty-six periods to test investors' behavioral patterns in securities trading. Then, we investigate whether the gain ratio or loss ratio impacts on disposition effect and escalation of commitment after controlling other variables. The results summarized as follow: First, investors are exhibited disposition effect and escalation of commitment in securities trading. Second, sex, education, duration of securities trading, and investment amount did not affect the disposition effect and escalation of commitment. Third, disposition effect and escalation of commitment has negative impact on performance. Finally, we find individual investors with stronger disposition effect are more likely to be escalated in securities trading.

DOI 10.11648/j.ijber.20180701.11
Published in International Journal of Business and Economics Research (Volume 7, Issue 1, February 2018)
Page(s) 1-6
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Escalation of Commitment, Disposition Effect, Prospect Theory

References
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Author Information
  • School of Business, Nanjing Normal University, Nanjing, China; Jiangsu Vocational College of Agriculture and Forestry, Zhenjiang, China

  • School of Business, Nanjing Normal University, Nanjing, China

  • School of Business, Nanjing Normal University, Nanjing, China

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  • APA Style

    Gao Kai, Jia Chen, Nie Lei. (2018). The Escalation of Commitment and Disposition Effect in Securities Trading: An Experimental Study. International Journal of Business and Economics Research, 7(1), 1-6. https://doi.org/10.11648/j.ijber.20180701.11

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    ACS Style

    Gao Kai; Jia Chen; Nie Lei. The Escalation of Commitment and Disposition Effect in Securities Trading: An Experimental Study. Int. J. Bus. Econ. Res. 2018, 7(1), 1-6. doi: 10.11648/j.ijber.20180701.11

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    AMA Style

    Gao Kai, Jia Chen, Nie Lei. The Escalation of Commitment and Disposition Effect in Securities Trading: An Experimental Study. Int J Bus Econ Res. 2018;7(1):1-6. doi: 10.11648/j.ijber.20180701.11

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  • @article{10.11648/j.ijber.20180701.11,
      author = {Gao Kai and Jia Chen and Nie Lei},
      title = {The Escalation of Commitment and Disposition Effect in Securities Trading: An Experimental Study},
      journal = {International Journal of Business and Economics Research},
      volume = {7},
      number = {1},
      pages = {1-6},
      doi = {10.11648/j.ijber.20180701.11},
      url = {https://doi.org/10.11648/j.ijber.20180701.11},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ijber.20180701.11},
      abstract = {This paper investigates the relationship between disposition effect and escalation of commitment in securities trading. First, we developed an investment simulation system, that manipulated five stocks' price during thirty-six periods to test investors' behavioral patterns in securities trading. Then, we investigate whether the gain ratio or loss ratio impacts on disposition effect and escalation of commitment after controlling other variables. The results summarized as follow: First, investors are exhibited disposition effect and escalation of commitment in securities trading. Second, sex, education, duration of securities trading, and investment amount did not affect the disposition effect and escalation of commitment. Third, disposition effect and escalation of commitment has negative impact on performance. Finally, we find individual investors with stronger disposition effect are more likely to be escalated in securities trading.},
     year = {2018}
    }
    

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    T1  - The Escalation of Commitment and Disposition Effect in Securities Trading: An Experimental Study
    AU  - Gao Kai
    AU  - Jia Chen
    AU  - Nie Lei
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    DO  - 10.11648/j.ijber.20180701.11
    T2  - International Journal of Business and Economics Research
    JF  - International Journal of Business and Economics Research
    JO  - International Journal of Business and Economics Research
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    EP  - 6
    PB  - Science Publishing Group
    SN  - 2328-756X
    UR  - https://doi.org/10.11648/j.ijber.20180701.11
    AB  - This paper investigates the relationship between disposition effect and escalation of commitment in securities trading. First, we developed an investment simulation system, that manipulated five stocks' price during thirty-six periods to test investors' behavioral patterns in securities trading. Then, we investigate whether the gain ratio or loss ratio impacts on disposition effect and escalation of commitment after controlling other variables. The results summarized as follow: First, investors are exhibited disposition effect and escalation of commitment in securities trading. Second, sex, education, duration of securities trading, and investment amount did not affect the disposition effect and escalation of commitment. Third, disposition effect and escalation of commitment has negative impact on performance. Finally, we find individual investors with stronger disposition effect are more likely to be escalated in securities trading.
    VL  - 7
    IS  - 1
    ER  - 

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