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Individual investors trade excessively, sell winners too soon, and overweight stocks with lottery features and low expected returns. This paper proposes and models a financial innovation, called stock loan lotteries, that improves individual investor performance. An individual investor signs a...
Persistent link: https://www.econbiz.de/10011800598
at the individual investor level. We examine data from an incentivized framed field experiment that was part of a …
Persistent link: https://www.econbiz.de/10012542675
Chapter 1: Introduction to Behavioral Finance -- Chapter 2: Behavioral Questionnaire -- Chapter 3: Essential Behavioral Biases -- Chapter 4: The Prospect Theory -- Chapter 5: Essential Principles of Wealth Management Undermined -- Chapter 6: Investment Solutions -- Chapter 7: Conclusion.
Persistent link: https://www.econbiz.de/10015116687
We study the asset allocation of an investor with prospect theory (PT) preferences. First, we solve analytically the two-asset problem of the PT investor for one risk-free and one risky asset and find that loss aversion and the reference return affect differently less ambitious investors and...
Persistent link: https://www.econbiz.de/10013259535
Persistent link: https://www.econbiz.de/10002151526
Loss aversion has been shown to be an important driver of people’s investment decisions. Encouraged by regulators, financial institutions are in search of ways to incorporate clients’ loss aversion in their risk classifications. The most critical obstacle appears to be the lack of a valid...
Persistent link: https://www.econbiz.de/10013492094
Assuming loss aversion, stochastic investment and labor income processes, and a path-dependent target fund, we show that the optimal investment strategy for defined contribution pension plan members is a target-driven 'threshold' strategy. With this strategy, the equity allocation is increased...
Persistent link: https://www.econbiz.de/10013118086
This study models and examines how changes in marketing information affects the degree of investor's risk aversion, and in turn, influences investor's decision-makings process under uncertainty. Under the mixed assumptions, the theoretical evidence in this study indicates that cumulative...
Persistent link: https://www.econbiz.de/10013122168
Persistent link: https://www.econbiz.de/10003686247
Assuming the loss aversion framework of Tversky and Kahneman (1992), stochastic investment and labour income processes, and a path-dependent fund target, we show that the optimal investment strategy for defined contribution pension plan members is a target-driven ‘threshold' strategy, whereby...
Persistent link: https://www.econbiz.de/10012997284