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Investment performance and emotions: an international study


  • Guy Kaplanski
  • Haim Levy


Purpose - The purpose of this paper is to expand the peer effect analysis to investments in the stock market, where neither direct competition nor interaction with other investors exists. Design/methodology/approach - A total of 772 subjects dwelling in six countries completed a questionnaire about their satisfaction with the performance of their hypothetical investment in the stock market. They were informed about the performance of the local stock market and the performance of their peer group, referred to in the questionnaire as their “friends.” Findings - Only 5 per cent of subjects are indifferent to their friends’ investment performance, as advocates by expected utility paradigm. Most subjects are happier when their friends earn lower rather than higher returns. On average, subjects are better off losing rather than gaining money as long as their friends lose more money, which violates the univariate monotonicity axiom. A negligible number of subjects exhibit a consistent favorable response, which is a necessary condition for pure economic altruism. Hostility is greater in less-wealthy countries. No link is found with regard to economic inequality. Originality/value - This paper shows that when a conflict between absolute wealth and relative wealth arises, the latter dominates, even when the comparison is not with an opponent or a colleague but with the subject’s friends. The astonishing result is that subjects prefer having less wealth as long as their friends lose more, despite no direct competition between subjects as in ultimatum games and despite the performance being equal to market performance.

Suggested Citation

  • Guy Kaplanski & Haim Levy, 2019. "Investment performance and emotions: an international study," Studies in Economics and Finance, Emerald Group Publishing, vol. 36(1), pages 32-50, May.
  • Handle: RePEc:eme:sefpps:sef-11-2017-0311

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    More about this item


    Investment peer effect; Monotonicity axiom; Relative investment performance; A13; G02; G11;
    All these keywords.

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions


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