Regret, Pride, and the Disposition Effect

Working paper number
06-07
Publication Year
2006
Authors
Alexander Muermann
Jacqueline Volkman
Paper 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.
Acknowledgements

Muermann, Alexander and Jacqueline M. Volkman. 2006. "Regret, Pride, and the Disposition Effect." PARC Working Paper Series, WPS 06-07.