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

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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
Depositing User: Pure Connector
Date Deposited: 15 Dec 2016 00:05
Last Modified: 04 Nov 2020 00:47
URI: https://ueaeprints.uea.ac.uk/id/eprint/61733
DOI: 10.1002/soej.12202

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