Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/161406 
Year of Publication: 
1991
Series/Report no.: 
Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel No. 276
Publisher: 
Universität Kiel, Institut für Betriebswirtschaftslehre, Kiel
Abstract: 
The "disposition effect" is the tendency to sell assets that have gained value ("winners") and keep assets that have lost value ("losers"). Disposition effects can be explained by two elements of prospect theory: The idea that people value gains and losses relative to the initial purchase price (a reference point), and the tendency to seek risks when faced with losses and avoid risks when faced with gains. In our experiments, subjects buy and sell shares in six risky assets. Asset prices fluctuate each period. As the disposition effect predicts, subjects sell winners and keep losers. When shares are automatically sold at the end of each period, the disposition effect is greatly reduced.
Document Type: 
Working Paper
Document Version: 
Digitized Version

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