Survey_LKP_2012

Abstract

A total of 66 undergraduate students (40 men, 26 women) from a university in The Netherlands, with an average age of 22.79 years, participated. Participants are informed that their reward depended on the final value of their investment. The larger the loss (gain) one incurred, the smaller (larger) the final reward they received. On average, in the loss domain, participants received about EUR 4. Participants were assigned to individual cubicles and presented with the study scenario: They recently had started investing in a single stock X. The amount initially invested was predetermined and equal for all participants. We specified up to ten investment periods, in which the stock price declined. To enhance the realism of the price patterns, we eliminated the possibility of long runs of losses. After each period, participants received information about the stock’s performance, answered a short questionnaire about emotions and other questions (see details in the Measures section), and were asked whether they wanted to hold or sell the whole invested amount. The experiment ended after participants decided to sell the stock, for those who never chose to sell, the experiment ended after 10 periods. The procedure for Experiment 2 was the same as in Experiment 1, except that we tested the hypotheses relevant to the gain instead of the loss domain. A total of 64 undergraduate students (40 men, 24 women) from a university in The Netherlands, with an average age of 23.16 years, participated. Participants were informed that their rewards again depended on the final value of their investment (higher increase in value of the stock, large final reward), on average, they received about EUR 6. The procedures for Experiments 3 and 4 are very similar to Experiments 1 and 2, except that participants first make a choice of what to invest in. In the experimental scenario, we presented four stocks to the participants and asked them to make up their own portfolio by deciding how much to invest in each stock. Participants then decide how to allocate their capital to invest in at least 1 and up to 4 stocks, the amounts invested in the four stocks have to add up to 100% of their portfolio. For example, one can invest in each of the four stocks equally (25% x 4), or invest in one stock only (100%) and none in the other three (0%). The exact composite of the portfolio is not of interest here, we just intent to have the participants actively engaged in the initial purchase and feel responsible for the decision. A total of 64 undergraduate students participated. Their rewards again depended on the final value of their investment, on average, they received about EUR 4.4. The procedure for Experiment 4 is very similar to Experiment 3, except that the price pattern for Experiment 4 is a mirror image of Experiment 3 (i.e., gains instead of losses). A total of 61 undergraduate students participated. Their rewards again depended on the final value of their investment, on average, they received about EUR 5.6 and held the winning stock for 3.3 periods (SD = 2.0). When participants sold the winner, they had incurred an average gain of 11.4%. A total of 200 decisions were collected in gain domain.