The Pension Research Council
Twitter Facebook LinkedIn YouTube Blog
Working Paper

Regret, Pride, and the Disposition Effect

Alexander Muermann and Jacqueline M. Volkman
WP2007-03

Sign up or sign in to download

Abstract

We develop a dynamic portfolio choice model which incorporates anticipated regret and pride in individual’s preferences and show that those preferences can cause investors to sell winning stocks and hold on to losing stocks; that is, anticipating regret and pride can help explain the disposition effect.