Losers, Winners and Biased Trades

  title={Losers, Winners and Biased Trades},
  author={G. Tellis and D. Macinnis and Joseph Johnson},
  journal={FEN: Behavioral Finance (Topic)},
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… Expand
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 onExpand
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 losingExpand
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 losingExpand
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 toExpand
Not all streaks are the same: Individual differences in risk preferences during runs of gains and losses
Runs of gains and losses are particularly salient to decision makers because of their perceived departure from randomness, as well as their immediate impact on the financial status of the decisionExpand
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 carExpand
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 groupsExpand
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 thatExpand
Convexity Neglect in Consumer Decision Making
Purchase decisions occasionally involve ratio calculations (e.g., calories per serving). When faced with decisions that involve information presented in such formats, consumers often ignore theExpand
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’Expand


Choosing versus rejecting: Why some options are both better and worse than others
  • E. Shafir
  • Psychology, Medicine
  • Memory & cognition
  • 1993
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. Expand
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 largeExpand
Taking Stock of Stockbrokers: Exploring Momentum versus Contrarian Investor Strategies and Profiles
Two studies were conducted among professional security analysts to explore their patterns of decision making while managing investment portfolios. In study 1, a computer-based simulation, theExpand
Betting on trends: Intuitive forecasts of financial risk and return
Abstract Based on nearly 38 000 forecasts of stock prices and exchange rates, it appears that non-experts expect the continuation of apparent past ‘trends’ in prices. Thus, they are optimistic inExpand
Explaining the price-volume relationship: The difference between price changes and changing prices
Abstract Trading on the stock market increases when there are large changes in price levels, and falls when these changes are small. An experimental test revealed strong support for the hypothesisExpand
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 investigatesExpand
Predicting the Next Step of a Random Walk: Experimental Evidence of Regime-Shifting Beliefs
Two experiments with MBA-student participants support Barberis, Shleifer, and Vishny's (1998) prediction that investors expect random-walk sequences to shift between continuation regimes (in whichExpand
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, bookExpand
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 doExpand
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 wasExpand