Sharif Digital Repository

After introducing “Prosopect Theory” by Kahneman and Tversky in 1979, it is mostly used as an alternative to expected utility theory in order to study human decision making under risky situatutions. Loss aversion has been considered as an important aspect of this theory. In this study, we review loss aversion and the effects of education and gender on it. Finally, we study the effect of repeating a gamble on its participants’ loss aversions. The results show that education and gender have direct effects on loss aversion and repeating a gamble can decrease loss aversion of participants.

 

Behavioral finance researchers have introduced behavioral biases, derived from psychology, to financial models in order to make them more realistic and to increase their explanatory power.One of the best known of these biases, considered in behavioral finance literature, is overconfidence, which means investors overestimate their own knowledge and ability to evaluate securities. Several theoretical models have studied the effects of this bias on financial markets and many empirical models have examined their assumptions, looking for whether investors are overconfident or not. Explained by these models, price overreaction to private information arrival and underreaction to public signal, is... 

Individuals’ cognitive and behavioral biases can be strengthened or weakened by various factors. When these biases manifest in financial markets, they influence trading behavior and portfolio returns of investors, and from a macro perspective, they affect market efficiency. During 2020–2021, some Tehran Stock Exchange brokerage firms automatically placed purchase orders for initial public offerings on behalf of their clients. Observing the returns generated by these IPO purchases can strengthen self attribution bias and foster overconfidence among traders, encouraging more aggressive trades. This study uses transaction level stock market data and a difference in differences statistical model...