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Put your head in the sand or lose a grand?: A natural experiment of the ostrich effect and the disposition effect
Linköping University, Department of Management and Engineering, Economics.
Linköping University, Department of Management and Engineering, Economics.
2018 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesisAlternative title
Stoppa huvudet i sanden eller förlora investeringen? : Ett naturligt experiment av strutseffekten och dispositionseffekten (Swedish)
Abstract [en]

This thesis presents an attempt to find evidence of the ostrich effect and the disposition

effect, as well as individual differences in self-assessed financial knowledge and its effect on

these biases. The ostrich effect refers to the tendency to deliberately avoid information that

might be negative, by "sticking your head in the sand". The disposition effect refers to people

who hold on to losing assets too long while selling winning ones too early. The two effects

were examined through a natural experiment which emerged from the stock market crash

that occurred February 5th, 2018. The data was collected during an internship at

Länsförsäkringar AB and originates from the usage of Länsförsäkringar's application

Sparnavigatorn, where customers can manage their savings. The customers login activity and

number of placed sales orders were observed. The data material is unique, and the study

enabled a unique presentation of real life behaviour within a financial context and an analysis

of whether individual differences affect behaviour. To our knowledge, neither the ostrich

effect nor the disposition effect have earlier been examined through a large scale natural

experiment. The results show no significant indication of the ostrich effect, but rather a

relatively constant login activity not affected by the stock market crash. Furthermore, they

show a contradictory reaction to what the disposition effect suggests, meaning the

respondents place more sales orders during the stock market fall than at the time before and

after. The results imply that further research needs to be done to either reject or confirm the

existence of the ostrich effect and the disposition effect.

Place, publisher, year, edition, pages
2018. , p. 53
Keywords [en]
Behavioural economics; behaviour; ostrich effect; disposition effect; savings; natural experiment; Homo Ignorans; financial behaviour; finance; bank
Keywords [sv]
beteendeekonomi; beteende; strutseffekten; dispositionseffekten; sparande; naturligt experiment; Homo Ignorans; finansiellt beteende; finans; bank
National Category
Economics
Identifiers
URN: urn:nbn:se:liu:diva-150095ISRN: LIU-IEI-FIL-A--18/02877--SEOAI: oai:DiVA.org:liu-150095DiVA, id: diva2:1238102
External cooperation
Länsförsäkringar AB
Subject / course
Master Thesis in Economics
Supervisors
Available from: 2018-09-14 Created: 2018-08-12 Last updated: 2018-09-14Bibliographically approved

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