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The Effect of Anticipated and Experienced Regret and Pride on Investors Future Selling Decisions

Author

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  • Roman Kraussl
  • Carmen Lee
  • Leo Paas

    (LSF)

Abstract

This paper investigates the effect of anticipated/experienced regret and pride on individual investors decisions to hold or sell a winning or losing investment, in the form of the disposition effect. As expected the results suggest that in the loss domain, low anticipated regret predicts a greater probability of selling a losing investment. While in the gain domain, high anticipated pride indicates a greater probability of selling a winning investment. The effects of high experienced regret/pride on the selling probability are found as well. An unexpected finding is that regret (pride) seems to be not only relevant for the loss (gain) domain, but also for the gain (loss) domain. In addition, this paper presents evidence of interconnectedness between anticipated and experienced emotions. The authors discuss the implications of these findings and possible avenues for further research.

Suggested Citation

  • Roman Kraussl & Carmen Lee & Leo Paas, 2013. "The Effect of Anticipated and Experienced Regret and Pride on Investors Future Selling Decisions," LSF Research Working Paper Series 13-5, Luxembourg School of Finance, University of Luxembourg.
  • Handle: RePEc:crf:wpaper:13-5
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    Keywords

    Regret; pride; the disposition effect; risky decision;
    All these keywords.

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