IDEAS home Printed from https://ideas.repec.org/p/zbw/ismwps/299598.html
   My bibliography  Save this paper

Einflüsse von kognitiven Verzerrungen auf das Anlageverhalten deutscher Privataktionäre

Author

Listed:
  • Hampe, Lena
  • Rommel, Kai

Abstract

This scientific working paper explains the influence of four selected cognitive biases regarding the investment behaviour of German private shareholders. In detail, it contains a theoretical treatment, as well as an empirical impact study of these four biases. Starting with the definition of cognitive biases in chapter 2, the term "German private shareholders" will be defined afterwards. Then the relevance of psychology in the stock exchange and the consumer behaviour from the behavioural finance perspective is analysed. The theories regarding the capital market prices developed by Fama, Hansen and Shiller give different perspectives towards the need of psychology in the stock exchange. Taking account of the different approaches, a model is developed to illustrate investment behaviour of private shareholders which is influenced not only by cognitive biases and social-psychological effects but also by rational behaviour. The subsequent experiment was executed on a diversified composition of six private shareholders and investigated the following four biases: anchoring effect, dilution effect which describes the influence of non-relevant information, framing effect which is the different valuation of two terms, and the disposition effect. This is measured by the influence of acquisition prices on the sell decision. For this purpose, an experiment with simulated situations of the stock exchange was developed. The subjects of the experiment had several response options that resulted in either rational, bounded rational, or irrational behaviour. The results of the theoretical part and of the experiment can refute an entire rationality of the stock exchange and the investment behaviour because every subject was influenced by at least one cognitive bias. Therefore, the experiment determined an influence of cognitive biases, although the strength and quantity varied individually. Besides, no correlation between the cognitive biases was determined, but it can be inferred from the experiment that the higher the willingness to assume the risk and the experience on the stock exchange market, the more rational investment behaviour will be. The results of this experiment give a first insight on how cognitive biases might affect rational behaviour on stock markets and how the theory of bounded rationality can explain these biases.

Suggested Citation

  • Hampe, Lena & Rommel, Kai, 2017. "Einflüsse von kognitiven Verzerrungen auf das Anlageverhalten deutscher Privataktionäre," ISM Working Papers 7, International School of Management (ISM), Dortmund.
    • Handle: RePEc:zbw:ismwps:299598
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/299598/1/ism-wp07.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Roßbach, Peter, 2001. "Behavioral finance: eine Alternative zur vorherrschenden Kapitalmarkttheorie?," Frankfurt School - Working Paper Series 31, Frankfurt School of Finance and Management.
    2. Richard H. Thaler, 2008. "Mental Accounting and Consumer Choice," Marketing Science, INFORMS, vol. 27(1), pages 15-25, 01-02.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lauren Skinner Beitelspacher & Thomas L. Baker & Adam Rapp & Dhruv Grewal, 2018. "Understanding the long-term implications of retailer returns in business-to-business relationships," Journal of the Academy of Marketing Science, Springer, vol. 46(2), pages 252-272, March.
    2. Mengyuan Zhou, 2022. "Does the Source of Inheritance Matter in Bequest Attitudes? Evidence from Japan," Journal of Family and Economic Issues, Springer, vol. 43(4), pages 867-887, December.
    3. David R. Bell & Jeongwen Chiang & V. Padmanabhan, 1999. "The Decomposition of Promotional Response: An Empirical Generalization," Marketing Science, INFORMS, vol. 18(4), pages 504-526.
    4. Martín Egozcue & Sébastien Massoni & Wing-Keung Wong & RiÄ ardas Zitikis, 2012. "Integration-segregation decisions under general value functions: "Create your own bundle — choose 1, 2, or all 3!"," Documents de travail du Centre d'Economie de la Sorbonne 12057, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    5. Tal Gross & Timothy J. Layton & Daniel Prinz, 2022. "The Liquidity Sensitivity of Healthcare Consumption: Evidence from Social Security Payments," American Economic Review: Insights, American Economic Association, vol. 4(2), pages 175-190, June.
    6. De los Santos, Babur & Kim, In Kyung & Lubensky, Dmitry, 2018. "Do MSRPs decrease prices?," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 429-457.
      • Babur De los Santos & In Kyung Kim & Dmitry Lubensky, 2013. "Do MSRPs Decrease Prices?," Working Papers 2013-13, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    7. Liu, Zhiqiang & Yan, Miao & Fan, Youqing & Chen, Liling, 2021. "Ascribed or achieved? The role of birth order on innovative behaviour in the workplace," Journal of Business Research, Elsevier, vol. 134(C), pages 480-492.
    8. Kim, Joonkyung & Zhao, Min & Soman, Dilip, 2023. "Converging vs diverging: The effect of visual representation of goal structure on financial decisions," International Journal of Research in Marketing, Elsevier, vol. 40(2), pages 362-377.
    9. Kristien Werck & Bruno Heyndels & Benny Geys, 2008. "The impact of ‘central places’ on spatial spending patterns: evidence from Flemish local government cultural expenditures," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 32(1), pages 35-58, March.
    10. Miguel Godinho de Matos & Pedro Ferreira, 2020. "The Effect of Binge-Watching on the Subscription of Video on Demand: Results from Randomized Experiments," Information Systems Research, INFORMS, vol. 31(4), pages 1337-1360, December.
    11. Yizhao Jiang, 2022. "The Influence of Payment Method: Do Consumers Pay More with Mobile Payment?," Papers 2210.14631, arXiv.org.
    12. Dipankar Chakravarti & Atanu Sinha & Jaewhan Kim, 2005. "Choice Research: A Wealth of Perspectives," Marketing Letters, Springer, vol. 16(3), pages 173-182, December.
    13. Martin Kukuk & Stefan Winter, 2008. "An Alternative Explanation of the Favorite-Longshot Bias," Journal of Gambling Business and Economics, University of Buckingham Press, vol. 2(2), pages 79-96, September.
    14. John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian, 2017. "Does Aggregated Returns Disclosure Increase Portfolio Risk Taking?," The Review of Financial Studies, Society for Financial Studies, vol. 30(6), pages 1971-2005.
    15. Moshe Levy & Haim Levy, 2013. "Prospect Theory: Much Ado About Nothing?," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 7, pages 129-144, World Scientific Publishing Co. Pte. Ltd..
    16. Diamond, Peter, 2008. "Behavioral economics," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1858-1862, August.
    17. Oliveira-Castro, Jorge M., 2003. "Effects of base price upon search behavior of consumers in a supermarket: An operant analysis," Journal of Economic Psychology, Elsevier, vol. 24(5), pages 637-652, October.
    18. White, Tiffany Barnett & Novak, Thomas P. & Hoffman, Donna L., 2014. "No Strings Attached: When Giving It Away Versus Making Them Pay Reduces Consumer Information Disclosure," Journal of Interactive Marketing, Elsevier, vol. 28(3), pages 184-195.
    19. Jae‐Do Song, 2023. "Excessive banking preference in emissions trading," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 448-458, January.
    20. Elias L. Khalil, 2024. "Mental accounting, heuristics, and the second‐best: Solving the calculator‐jacket puzzle," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(4), pages 2415-2427, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:ismwps:299598. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/ismdode.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.