Disposition effect and reference points: An experimental study.

This study calls into question the default computation of the disposition effect that uses the average purchase price as a reference point. We show, through a lab experiment, that the reference price of participants can change depending on the experimental behavioral design that is used. Our results show that for the control group, different reference prices do not show significant differences in the computation of the disposition effect, thus supporting the use of the average purchase price as a reference.