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.

Propensity to sell stocks in an artificial stock market.

This experimental study of an artificial stock market investigates what explains the propensity to sell stocks and thus the disposition effect. It is a framed field experiment that follows the steps of a previous observational study of investor behavior in the Finnish stock market. Our experimental approach has an edge over the observational study in that it can control extraneous variables and two or more groups can be compared.

Personality traits and investor profile analysis: A behavioral finance study.

This study investigates which of four paradigms best portrays the risk profile manifest by investors in their financial asset investment decisions. The paradigms used to explain this profile were: prospect theory, investor profile analysis (IPA), the Big Five Personality Test, and the Cognitive Reflection Test (CRT). The choice of proxy for the risk preferences (profile) of a typical investor was defined by simulating investments in a laboratory setting.

2D:4D digit ratio predicts delay of gratification in preschoolers.

We replicate the Stanford marshmallow experiment with a sample of 141 preschoolers and find a correlation between lack of self-control and 2D:4D digit ratio. Children with low 2D:4D digit ratio are less likely to delay gratification. Low 2D:4D digit ratio may indicate high fetal testosterone.

Preschoolers and the endowment effect.

We show that preschoolers exhibit the endowment effect as evidenced by experiments where children generally chose to keep their own toys rather than trading them for similar ones. Furthermore, we relate the emergence of this effect to children's innate psychobiological traits--emotional state, gender, handedness, and digit ratio. The trials were conducted with 141 children across 6 kindergartens.

Psychophysiological correlates of the disposition effect.

We assess the psychophysiological characteristics underlying the disposition effect and find that subjects showing greater disposition effect are those who sweat more and present lower body temperature and heart rate.