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

Gao Kai; Jia Chen; Nie Lei

doi:doi:10.11648/j.ijber.20180701.11

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

Gao Kai, Jia Chen, Nie Lei

Published in International Journal of Business and Economics Research (Volume 7, Issue 1)

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.

Published in	International Journal of Business and Economics Research (Volume 7, Issue 1)
DOI	10.11648/j.ijber.20180701.11
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), 2018. Published by Science Publishing Group

Keywords

Escalation of Commitment, Disposition Effect, Prospect Theory

References

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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://article.sciencepublishinggroup.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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TY  - JOUR
T1  - The Escalation of Commitment and Disposition Effect in Securities Trading: An Experimental Study
AU  - Gao Kai
AU  - Jia Chen
AU  - Nie Lei
Y1  - 2018/01/23
PY  - 2018
N1  - https://doi.org/10.11648/j.ijber.20180701.11
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
SP  - 1
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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Author Information

Gao Kai

School of Business, Nanjing Normal University, Nanjing, China
Jia Chen

School of Business, Nanjing Normal University, Nanjing, China
Nie Lei

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

Copy | Download

@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://article.sciencepublishinggroup.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}
}

Copy | Download

TY  - JOUR
T1  - The Escalation of Commitment and Disposition Effect in Securities Trading: An Experimental Study
AU  - Gao Kai
AU  - Jia Chen
AU  - Nie Lei
Y1  - 2018/01/23
PY  - 2018
N1  - https://doi.org/10.11648/j.ijber.20180701.11
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
SP  - 1
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  -

Copy | Download