Survey_LKLP_2

Abstract

Respondents considered a single stock, about which they had to make multiple decisions to hold or sell. The amounts and timing of losses varied across respondents. In our experiment, 111 students at a Dutch university (72 male, 39 female) participated, with a chance to win a €100 prize by enrolling in a lottery. Better performance in the investment experiment resulted in a higher probability of winning the prize. Participants arrived at the lab and were assigned to individual cubicles. They reviewed a scenario in which they recently started investing in a single stock, stock X. The amount invested in stock X was predetermined and equal for every participant. We specified up to 10 investment periods for the experiment. After each period, participants received information on the stock’s performance and were asked whether they wanted to hold or sell the stock. They could only choose to sell or hold the entire invested amount. Before each decision, respondents answered a short questionnaire that elicited their expectation of the stock’s future performance and their reference point adaptation level.