The impact of behavioral pitfalls on investors’ decisions: The disposition effect in the Taiwanese warrant market

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Chih-Hsiang Chang
Cite this article:  Chang, C. (2008). The impact of behavioral pitfalls on investors’ decisions: The disposition effect in the Taiwanese warrant market. Social Behavior and Personality: An international journal, 36(5), 617-634.


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Investors in the Taiwanese warrant markets were investigated to examine the existence of the disposition effect to sell winners too early and hold losers too long. Empirical results indicate that: first, both the disposition effect and house money effect exist in the Taiwanese warrant market. Secondly, the issuance price of a warrant is the predominant reference for investors to make strategic decisions. Furthermore, subloser investors are more concerned with the new high more than with the new low when they make a strategic decision. In the end, warrants with different issuance prices, warrants with different returns, and warrants with different market prices were found to exhibit the differentiated disposition behavior.

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