Does Prospect Theory Explain the Disposition Effect?
نویسندگان
چکیده
منابع مشابه
Does Prospect Theory Explain the Disposition Effect?*
The disposition effect is the observation that investors hold winning stocks too long and sell losing stocks too early. A standard explanation of the disposition effect refers to prospect theory and in particular to the asymmetric risk aversion according to which investors are risk averse when faced with gains and risk-seeking when faced with losses. We show that for reasonable parameter values...
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There is a recent debate on whether prospect theory can explain the disposition effect. Using both theory and simulation, this paper shows that prospect theory often predicts the disposition effect when lagged expected final wealth is the reference point under the principle of preferred personal equilibrium, regardless of whether the reference point is updated or not. When initial wealth is the...
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We examine developmental systems theory (DST) with two questions in mind: What does DST explain? How does DST explain it? To answer these questions, we start by reviewing major contributions to the origins of DST: the introduction of the idea of a "developmental system", the idea of probabilistic epigenesis, the attention to the role of information in the developmental system, and finally the e...
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ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2005
ISSN: 1556-5068
DOI: 10.2139/ssrn.970450