Losers, Winners and Biased Trades

@article{Tellis2005LosersWA,
  title={Losers, Winners and Biased Trades},
  author={Gerard J. Tellis and Deborah J. MacInnis and Joseph M. Johnson},
  journal={FEN: Behavioral Finance (Topic)},
  year={2005}
}
When faced with sequential information, consumers tend to fall prey to one of two well-known heuristics: the hot (or cold) hand and the gambler's fallacy. The authors relate these two traditionally separate heuristics to differences in accepting (buy) versus rejecting (sell) decisions. They identify trend length as a contextual moderating variable and show an asymmetry between buying and selling frames. When applied to a stock market context, a consistent finding is that consumers prefer to buy… 
Blowing bubbles: Heuristics and biases in the run-up of stock prices
Ads of stocks and mutual funds typically tout their past performance, despite a disclosure that past performance does not guarantee future returns. Are consumers motivated to buy or sell based on
Selling losers and keeping winners: How (savings) goal dynamics predict a reversal of the disposition effect
A well-documented behavioral pattern in consumer financial decision making is the disposition effect, which refers to the tendency to sell winning investments too early while holding on to losing
ASSOCIATION FOR CONSUMER RESEARCH
To advertise a promotional lottery or sweepstake, it is common to feature previous winners, with some personal information. We show that respondents estimate their odds of winning the next drawing to
Behavioral Decision Making in the (Q,R) Purchasing Model: An Experimental Study
This paper presents and analyzes the results of a decision‐making experiment in inventory management under uncertainty. The experiment included 81 participants who played the role of a small car
Investment Trios Are Less Prone to the Hot Hand and Gambler’s Fallacies and Make Better Investment Strategies
An experimental study was conducted to determine the minimum group size for which the mitigating effect for the hot hand and gambler’s fallacies can be felt. This is quantified by looking if groups
Does the Color of Feedback Affect Investment Decisions
This paper presents a multi-period experiment that extends a classic experiment on investment allocation preferences by adding colors to the feedback returned to participants. The results show that
The Long and Short of it: Why are Stocks with Shorter Runs Preferred?
This article examines how consumers process graphical financial information to estimate risk. We propose that consumers sample the local maxima and minima of a graph to infer the variation around a
Behavioral biases in marketing
Psychology and economics (together known as behavioral economics) are two prominent disciplines underlying many theories in marketing. The extensive marketing literature documents consumers’
Self-Attribution Bias in Consumer Financial Decision-Making: How Investment Returns Affect Individuals' Belief in Skill
Self-attribution bias is a long-standing concept in psychology research and refers to individuals’ tendency to attribute successes to personal skills and failures to factors beyond their control.
Impact of Mad Money Stock Recommendations: Merging Financial and Marketing Perspectives
This article relies on advertising and persuasive communications theories to uncover persistent variations in investor response to television stock recommendations targeting naive investors. The
...
...

References

SHOWING 1-10 OF 26 REFERENCES
Choosing versus rejecting: Why some options are both better and worse than others
TLDR
A previously unobserved pattern of choice behavior is predicted and corroborated, and the positive and negative dimensions of options are expected to loom larger when one is choosing andWhen one is rejecting, respectively.
Are Investors Reluctant to Realize Their Losses?
I test the disposition effect, the tendency of investors to hold losing investments too long and sell winning investments too soon, by analyzing trading records for 10,000 accounts at a large
Does the Stock Market Overreact
Research in experimental psychology suggests that, in violation of Bayes' rule, most people tend to "overreact" to unexpected and dramatic news events. This study of market efficiency investigates
Contrarian Investment, Extrapolation, and Risk
For many years, stock market analysts have argued that value strategies outperform the market. These value strategies call for buying stocks that have low prices relative to earnings, dividends, book
Hot Hands in Mutual Funds: Short‐Run Persistence of Relative Performance, 1974–1988
The relative performance of no-load, growth-oriented mutual funds persists in the near term, with the strongest evidence for a one-year evaluation horizon. Portfolios of recent poor performers do
Efficient Capital Markets: II
SEQUELS ARE RARELY AS good as the originals, so I approach this review of the market efficiency literature with trepidation. The task is thornier than it was 20 years ago, when work on efficiency was
Another look at reasons for choosing and rejecting
TLDR
The accentuation model was tested against weight-change models in two experiments, one using various decision scenarios and the other using four-trait adjective descriptions of potential roommates, which were consistent with accentuation theory and inconsistent with a systematic change in weighting of positive and negative attributes across choice and rejection tasks.
The theory of value and earnings, and an introduction to the Ball‐Brown analysis*
. The paper develops a simple and parsimonious model that relates earnings and unexpected earnings to market returns. The analysis emphasizes that any model under uncertainty must be consistent with
...
...