Do Investor Sophistication and Trading Experience Eliminate Behavioral Biases in Financial Markets

By Lei Feng, Mark S. Seasholes. 2005

795 citations recorded by the source corpus.

Subfields: Economics and Econometrics, Finance, General Decision Sciences

View Paper: https://www.semanticscholar.org/paper/181a113893d5e8b16513d866b9c1c83200f9f34e

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Citations in the corpus

Does Prospect Theory Explain the Disposition Effect? (2011, neutral): “Furthermore, Feng and Seasholes [2005] show that the less sophisticated investors are and the less trading experience they have, the more they are prone to the disposition effect. Therefore, we model the myopic portfolio choice of a small individual investor. To do so, we present a two-period model ”
Learning By Trading (2010, methodology): “time, since Feng and Seasholes (2005) only have about two years of transaction data.”
The disposition effect and investor experience (2013, background): “…there is financial counseling (Taylor, 2000; Shapira and Venezia, 2001), and it is heightened for inexperienced investors (Grinblatt and Keloharju, 2001; Coval and Shumway, 2005; Feng and Seasholes, 2005; Locke and Mann, 2005; Dhar and Zhu, 2006), though that is still unsettled (Chen et al., 2007).”
Do investors exhibit behavioral biases in investment decision making? A systematic review (2018, background): “Feng and Seasholes (2005) said that sophisticated investors are less prone to risk and experience can reduce the risk in investors to 72 per cent.”
The Worst, the Best, Ignoring All the Rest: The Rank Effect and Trading Behavior (2015, neutral): “…investors are more likely to sell a position as it becomes a larger gain, or a larger 11 Settings include individual investors (Odean 1998; Feng and Seasholes 2005; Kaustia 2010), mutual fund managers (Wermers 2003; Frazzini 2006), futures traders (Locke and Mann 2005) and prediction…”
Do Investors Learn from Experience? Evidence from Frequent IPO Investors (2011, positive): “Consistent with the rational-learning hypothesis,Feng and Seasholes(2005) andDhar and Zhu(2006) find that investors’ trading experience reduces the behavioral bias of the disposition effect.”
Are Investors Really Reluctant to Realize their Losses? Trading Responses to Past Returns and the Disposition Effect (2012, neutral): “Since there have been recommendations that economics be rebuilt based upon prospect theory,29 it 28 Feng and Seasholes (2005) document that the disposition effect weakens with individual investor sophistication and experience.”
Financial literacy, financial advice, and financial behavior (2017, background): “A related strand of literature analyzes the association between financial literacy and trading behavior (e.g., Feng and Seasholes 2005; Bilias et al. 2010; Hoffmann et al. 2013; Bucher-Koenen and Ziegelmeyer 2014; Guiso and Viviano 2015) and the corresponding studies generally document a positive…”
A Cross-Cultural Study of Reference Point Adaptation: Evidence from China, Korea, and the US (2010, neutral): “…such as stock trading, 2 E.g., Fama and French (1998), Rouwenhorst (1998), Grinblatt and Keloharju (2001), Chui, Titman, and Wei (2010), Feng and Seasholes (2005), and Dimson, Marsh, & Staunton (2008). repeated bargaining and negotiation, work efforts, and firm investments, it is…”