Risk aversion, the disposition effect and decision-making in groups
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2014
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This paper presents the results of a laboratory experiment conducted to investigate the manner in which the disposition effect affects individuals’ and groups’ investment decision making. We conducted six experimental sessions with 174 undergraduate students. We found that the students exhibited the disposition effect when working alone, but that the effect was no longer statistically significant when they made decisions together in two and three-member groups. We also observed that the disposition effect was the result of a high proportion of gains being realized, indicating that the individuals were more risk averse than the groups.