Disposition Effect Essay

The purpose of this annotated bibliography is to discuss the articles/research that contribute to the topic of disposition effect and investor decisions. The focus will be on the authors’ abstract, hypothesis, written analysis and their conclusions. A clear summary and assessment of the cited material will be provided covering the main points and amalgamation of the articles. There will be a total of five sources used to assist in this valuation.
Lee, H., Park, J., Lee, J., & Wyer, R. S. (2008). Disposition Effects and Underlying Mechanisms in E-Trading of Stocks. Journal Of Marketing Research (JMR), 45(3), 362-378. doi:10.1509/jmkr.45.3.362
This article is based on the disposition effects and underlying mechanisms in e-trading of stocks.
…show more content…
In comparing the annual gains and losses to the realized gains and losses, using the prospect theory suggests that the realized gain/loss exemplary envisages a disposition effect more consistently. The authors deliberate the propensity of an investor’s preference to sell a share that has a realized gain, as well as the notion of the decision to hold onto a share that is believe to rebound. Using this private information, as mentioned, may have an impact on the annual gains and losses as it relates to the investor. Furthermore, the inclination of finding an optimal trading level and share allocation is imperative in this article.
The conclusion is the association between the prospect theory preferences and how they can help predict the disposition effect. Even though it is declared that the annual gain/loss model fails to predict a disposition effect, it is important in determining a balanced portfolio of investments. The article correspondingly proposes there is more information to be found on the comprehensive analysis of realized gain/loss utility in relation to investor trading and/or asset

Related Documents

Related Topics