Salience and the disposition effect: Evidence from the introduction of "Cash-Outs" in betting markets

Brown, Alasdair and Yang, Fuyu (2017) Salience and the disposition effect: Evidence from the introduction of "Cash-Outs" in betting markets. Southern Economic Journal, 83 (4). 1052–1073. ISSN 0038-4038

Preview

PDF (Accepted manuscript) - Accepted Version Download (616kB) | Preview

Abstract

The disposition effect describes the tendency of investors to sell assets that have increased in value since purchase, and hold those that have not. We analyse the introduction of betting market ‘Cash-Outs’, which provide a continual update – and therefore increase the salience – of bettors’ paper profits/losses on each bet. We find that the introduction of Cash-Out increased the disposition effect in this market, as punters sold their profitable bets with greater frequency than before. We do not, however, find that the disposition effect has any impact on asset prices, either before or after this intervention.

Item Type:	Article
Uncontrolled Keywords:	disposition effect,salience,prospect theory,betting
Faculty \ School:	Faculty of Social Sciences > School of Economics
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Applied Econometrics And Finance
Depositing User:	Pure Connector
Date Deposited:	15 Dec 2016 00:05
Last Modified:	22 Oct 2022 01:59
URI:	https://ueaeprints.uea.ac.uk/id/eprint/61733
DOI:	10.1002/soej.12202

Downloads

Actions (login required)

View Item