When Trading Becomes Social: How Social Trading Platforms Affect the Disposition Effect

2022 | International Conference on Information Systems | Citations: 0

Authors: Jabr, Wael; Rai, Arun

Abstract: Social trading platforms have, over the last decade or so, been gaining a stron ... Expand

Abstract: Social trading platforms have, over the last decade or so, been gaining a strong foothold in individual investment markets. Users on these platforms can observe ("view") traders' detailed transactions over time. They can also ''follow'' anyone of those traders, just like with other social media platforms, investing their money in accordance with the strategies of their trader of choice. We study whether and how the disposition effect bias of individual traders is affected by two social features of the platform, "Views" and "Followers." We find a differentiated impact on this bias from those two social features, which is conditional on the level of market turbulence. We attribute this to how traders assess the signal originating from Views and Followers in relation to how committal it is. Collapse

Topics: social trading platform decision making electronic finance logistics management financial performance

Methods: theory development Z-test survival analysis cluster analysis hazard function

Theories: disposition effect behavioral economics