Published in:Working Paper Series, School of Business, Economics and Social Sciences, University of Graz
Extent:
1 Online-Ressource (35 p)
Language:
English
DOI:
10.2139/ssrn.3657007
Identifier:
Origination:
Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments July 21, 2020 erstellt
Description:
Retail investors are prone to the disposition effect and submit many more limit orders than market orders. Mechanical effects stemming from the price-contingency conditions for order executions can lead these limit orders to inflate an investor's measured disposition effect (Linnainmaa 2010). Our paper is the first to demonstrate that the relationship between the disposition effect and order choices is bi-directional. Using trading data of thousands of investors, we show that investors who are prone to the disposition effect differ from others in their use of limit orders and in their choice of limit prices