Social interactions, framing, and the disposition effect

Last registered on February 01, 2020

Pre-Trial

Trial Information

General Information

Title
Social interactions, framing, and the disposition effect
RCT ID
AEARCTR-0004304
Initial registration date
June 12, 2019
Last updated
February 01, 2020, 8:31 PM EST

Locations

Region

Primary Investigator

Affiliation
Paderborn University

Other Primary Investigator(s)

PI Affiliation
Paderborn University

Additional Trial Information

Status
Completed
Start date
2019-06-04
End date
2019-06-19
Secondary IDs
Abstract
Increasing overlap between social media and financial markets has led to the emergence of new business models in recent years. Several online brokerage services combine the services of online brokerage with features of social networks and allow individuals to manage their portfolios and exchange capital market related information. Typical features enable investors to disclose and discuss their investment decisions with their peers. Recent literature provides convincing evidence that investors' investment strategies are altered by the social interactions and peer comparisons on those platforms (Heimer, 2016; Pelster and Hofmann, 2018; Lukas et al., 2017). However, the exact manner of investors' adaptions to the new setting is still unclear. For example, while some papers argue that social interactions increase the disposition effect, others argue that the disposition effect is decreased in such a scopic regime. We argue that the conflicting results can be explained by the framing of the decision problem on the platforms and test our hypothesis in an experimental setting
External Link(s)

Registration Citation

Citation
Liêu, Minh Lý and Matthias Pelster. 2020. "Social interactions, framing, and the disposition effect." AEA RCT Registry. February 01. https://doi.org/10.1257/rct.4304-3.1
Former Citation
Liêu, Minh Lý , Matthias Pelster and Matthias Pelster. 2020. "Social interactions, framing, and the disposition effect." AEA RCT Registry. February 01. https://www.socialscienceregistry.org/trials/4304/history/61853
Sponsors & Partners

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Experimental Details

Interventions

Intervention(s)
This paper analyzes the impact of social interactions and framing on the disposition effect in an experiment based on Weber and Camerer (1998). Participants will be allocated to random groups of three and receive rankings, which display their "success" compared to the other participants in their group. Rankings will be altered between the control and treatment condition.
Intervention Start Date
2019-06-04
Intervention End Date
2019-06-19

Primary Outcomes

Primary Outcomes (end points)
disposition effect
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
This paper analyzes the impact of social interactions and framing on the disposition effect in an experiment based on Weber and Camerer (1998). Participants will be allocated to random groups of three and receive rankings, which display their "success" compared to the other participants in their group. Rankings will be altered between the control and treatment condition.
Experimental Design Details
Randomization Method
Randomization done in office by a computer
Randomization Unit
experimental sessions
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
6
Sample size: planned number of observations
78
Sample size (or number of clusters) by treatment arms
39 individuals control; 39 individuals treatment
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials

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IRB

Institutional Review Boards (IRBs)

IRB Name
German Association for Experimental Economic Research e.V.
IRB Approval Date
2019-06-03
IRB Approval Number
Y2LDoKRh
Analysis Plan

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Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
June 19, 2019, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
June 19, 2019, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
81 students
Was attrition correlated with treatment status?
No
Final Sample Size: Total Number of Observations
81 students
Final Sample Size (or Number of Clusters) by Treatment Arms
Data Publication

Data Publication

Is public data available?
Yes

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Program Files

Program Files
No
Reports, Papers & Other Materials

Relevant Paper(s)

Abstract
This paper studies the influence of framing on the relationship between trading in a transparent trading environment (a “scopic regime”) and the disposition effect. In principle, the recent literature agrees that social interactions alter investors’ disposition effect. However, while some studies argue the disposition effect increases in a social environment, others provide evidence that the disposition effect decreases under a scopic regime. We show that the framing of the decision problem on social trading platforms affects the sign on this relationship, and thereby synthesize the existing findings. Individuals alter their behavior to optimize their social image under the given framing.
Citation
Liêu Minh Lý & Matthias Pelster (2020) Framing and the disposition effect in a scopic regime, The Quarterly Review of Economics and Finance.

Reports & Other Materials