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Framing and the disposition effect in a scopic regime

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  • Liêu, L.M.
  • Pelster, M.

Abstract

This paper studies the influence of framing on the relationship between trading in a transparent trading environment (a “scopic regime”) and the disposition effect. In principle, the recent literature agrees that social interactions alter investors’ disposition effect. However, while some studies argue the disposition effect increases in a social environment, others provide evidence that the disposition effect decreases under a scopic regime. We show that the framing of the decision problem on social trading platforms affects the sign on this relationship, and thereby synthesize the existing findings. Individuals alter their behavior to optimize their social image under the given framing.

Suggested Citation

  • Liêu, L.M. & Pelster, M., 2020. "Framing and the disposition effect in a scopic regime," The Quarterly Review of Economics and Finance, Elsevier, vol. 78(C), pages 175-185.
    • Handle: RePEc:eee:quaeco:v:78:y:2020:i:c:p:175-185
    DOI: 10.1016/j.qref.2020.01.008
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    Cited by:

    1. Scheckenbach, Isabel & Wimmer, Maximilian & Dorfleitner, Gregor, 2021. "The higher you fly, the harder you try not to fall: An analysis of the risk taking behavior in social trading," The Quarterly Review of Economics and Finance, Elsevier, vol. 82(C), pages 239-259.
    2. Gutiérrez-Nieto, Begoña & Ortiz, Cristina & Vicente, Luis, 2023. "A bibliometric analysis of the disposition effect: Origins and future research avenues," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).
    3. Stephen L Cheung, 2024. "A meta-analysis of disposition effect experiments," Working Papers 2024-02, University of Sydney, School of Economics.
    4. Horn, Matthias & Schneider, Julian & Oehler, Andreas, 2024. "Do transactions on social trading platforms predict the stock market behavior of the aggregate private sector?," Finance Research Letters, Elsevier, vol. 66(C).
    5. Minh-Lý Liêu, 2021. "Peer attention and the disposition effect," Working Papers Dissertations 81, Paderborn University, Faculty of Business Administration and Economics.

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    More about this item

    Keywords

    Social interactions; Scopic regime; Online trading; Disposition effect;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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