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Letting Go of Your Losses: Experimental Evidence for Debiasing the Disposition Effect in Private Investment Decisions

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  • Christoph Dobrich
  • Jutta Wollersheim
  • Matthias Sporrle
  • Isabell M. Welpe

Abstract

This study examines the impact of two different debiasing interventions on the emergence of the disposition effect in the investment decisions of private investors. By means of a fully crossed 2 x 2 between-participants online experiment (N = 223) and an established stock market simulation task, we examine the potential debiasing effects of rational warnings and emotional warnings on the emergence of the disposition effect. The disposition effect was successfully eliminated by both debiasing strategies. The simultaneous presence of both interventions did not increase the solitary effect of each of the two interventions.

Suggested Citation

  • Christoph Dobrich & Jutta Wollersheim & Matthias Sporrle & Isabell M. Welpe, 2014. "Letting Go of Your Losses: Experimental Evidence for Debiasing the Disposition Effect in Private Investment Decisions," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 5(4), pages 1-13, November.
    • Handle: RePEc:jfr:jms111:v:5:y:2014:i:4:p:1-13
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    References listed on IDEAS

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    5. Patrick Roger, 2007. "Does the consciousness of the disposition effect increase the equity premium?," Working Papers of LaRGE Research Center 2007-01, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
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    Cited by:

    1. Stephen L Cheung, 2024. "A meta-analysis of disposition effect experiments," Working Papers 2024-02, University of Sydney, School of Economics.

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