Not all financial speculation is treated equally: Laypeople’s moral judgments about speculative short selling
AbstractSince the recent financial crisis, regulators and the general public have focused on financial speculation as one of its potential causes. In addition to the roles played by rating agencies and complicated financial engineering, speculative short sales have been put into question. However, laypeople’s moral judgments about this type of financial speculation have rarely been investigated in economic psychology. The present study aims to fill this gap. Across four studies, we find that laypeople’s moral judgments of short selling are significantly harsher than their judgments of long positions. Both successful (Study 1) and unsuccessful (Study 2) short selling receives harsher moral judgments. In addition, studies which manipulate the moral character of the shorted asset (Study 3) or the time horizon of the investment strategy (Study 4) support the conclusion that short selling is considered less moral than taking a similar long position. The results present consistent support for a judgment bias of economic laypeople in the domain of financial economics.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Psychology.
Volume (Year): 37 (2013)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/joep
Moral judgments; Financial speculation; Laypeople; Heuristics and biases;
Find related papers by JEL classification:
- C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
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