Good Reasons Sell: Reason-Based Choice among Group and Individual Investors in the Stock Market

Management Science

Volumn 49, Issue 12, 2003, Pages 1636-1652

  Barber, Brad M ^a   Heath, Chip ^b   Odean, Terrance ^c  

^a UNIVERSITY OF CALIFORNIA   (United States)

^b STANFORD UNIVERSITY   (United States)

^c UNIVERSITY OF CALIFORNIA   (United States)

Author keywords

Group Decision Making; Group Polarization; Reason Based Choice

Indexed keywords

DECISION MAKING; ECONOMIC AND SOCIAL EFFECTS; MANAGEMENT SCIENCE; MARKETING; PURCHASING; SALES;

GROUP DECISION MAKING; GROUP POLARIZATION; REASON-BASED CHOICE; STOCK MARKETS;

INVESTMENTS;

EID: 0942267052     PISSN: 00251909     EISSN: None     Source Type: Journal    
DOI: 10.1287/mnsc.49.12.1636.25109     Document Type: Article

References (42)

1. Antunovich, P., D. Laster. 1998. Do investors mistake a good company for a good investment? Unpublished paper, Federal Reserve Bank of New York, New York.
2. Barber, B. M., T. Odean. 2000a. Trading is hazardous to your wealth: The common stock investment performance of individual investors. J. Finance 55 773-806.
3. Barber, B. M., T. Odean. 2000b. Too many cooks spoil the profits: The performance of investment clubs. Financial Analysts J. 56 (January/February) 17-25.
4. Burnstein, E., A. Vinokur. 1977. Persuasive argumentation and social comparison as determinants of attitude polarization. J. Experiment. Soc. Psych. 13 315-332.
5. Clarke, R., M. Statman. 1994. Growth, value, good, and bad. Financial Analysts J. 50 82-86.
6. Compustat Industrial Annual Data 1990-1996, 2001. Standard & Poor's Compustat. McGraw-Hill, New York.
7. CRSP Stocks 1990-1996. 2001. Center for Research in Security Prices, Graduate School of Business, University of Chicago, Chicago, IL.
8. Davis, J. H. 1973. Group decision and social interaction: A theory of social decision schemes. Psych. Rev. 80 97-125.
9. DeBondt, W. F. M., R. H. Thaler. 1985. Does the stock market overreact. J. Finance 40 793-805.
10. _, _. 1987. Further evidence on investor overreaction and stock market seasonality. J. Finance 42 557-581.
11. Fama, E. F. 1991. Efficient capital markets II. J. Finance 46 1575-1618.
12. _, K. R. French. 1992. The cross-section of expected stock returns. J. Finance 47 427-465.
13. _, _. 1993. Common risk factors in returns on stocks and bonds. J. Financial Econom. 33 3-56.
14. Fortune Most Admired Companies Annual Data 1990-1996. 2001. Fortune.
15. Gigone, D., R. Hastie. 1993. The common knowledge effect: Information sharing and group judgment. J. Personality Soc. Psych. 65 959-974.
16. _, _. 1997. The impact of information on small group choice. J. Personality Soc. Psych. 72 132-140.
17. Harrington, B. 2001. Organizational performance and corporate social capital: A contingency model. S. Gabbay, R. Leenders, eds. Res. Sociology Organ. Elsevier, New York, 88-106.
18. _. 2002. The pervasive effects of network content. Unpublished working paper, Brown University, Providence, RI.
19. Hsee, C. K. 1996. The evaluability hypothesis: An explanation for preference reversals between joint and separate evaluation of alternatives. Organ. Behavior Human Decision Processes 67 247-257.
20. _. 1999. Value-seeking and prediction-decision inconsistency. Psychonomic Bull. Rev. 6 555-561.
21. _, G. F. Loewenstein, S. Blount, M. H. Bazerman. 1999. Preference reversals between joint and separate evaluations of options: A review and theoretical analysis. Psych. Bull. 125 576-590.
22. Irwin, J. R., J. H. Davis. 1995. Choice/matching preference reversals in groups: Consensus processes and justification-based reasoning. Organ. Behavior Human Decision Processes 64 325-339.
23. Isenberg, D. J. 1986. Group polarization: A critical review and meta-analysis. J. Personality Soc. Psych. 50 1141-1151.
24. Lakonishok, J., A. Shleifer, R. W. Vishny. 1994. Contrarian investment, extrapolation, and risk. J. Finance 49 1541-1578.
25. Lerner, J. S., P. E. Tetlock. 1999. Accounting for the effects of accountability. Psych. Bull. 125 255-275.
26. Luce, M. F. 1998. Choosing to avoid: Coping with negatively emotion-laden decisions. J. Consumer Res. 24 409-433.
27. _, J. R. Bettman, J. W. Payne. 1997. Choice processing in emotionally difficult decisions. J. Experiment. Psych.: Learn., Memory, Cognition 23 384-405.
28. _, J. W. Payne, J. R. Bettman. 1999. Emotional trade-off difficulty and choice. J. Marketing Res. 36 143-159.
29. Moscovici, S., M. Zavalloni. 1969. The group as a polarizer of attitudes. J. Personality Soc. Psych. 12 125-135.
30. Myers, D. G., H. Lamm. 1976. The group polarization phenomenon. Psych. Bull. 83 602-627.
31. Odean, T. 1999. Do investors trade too much? Amer. Econom. Rev. 89 1279-1298.
32. O'Hara, T. E., K. S. Janke. 1996. Starting and Running a Profitable Investment Club: The Official Guide from the National Association of Investment Clubs. Times Business, New York.
33. Payne, J. W., J. R. Bettman., E. J. Johnson. 1993. The Adaptive Decision Maker. Cambridge University Press, Cambridge, U.K.
34. Shafir, E., I. Simonson, A. Tversky. 1993. Reason-based choice. Cognition 49 11-36.
35. Shefrin, H. 2001. Do investors expect higher returns from safer stocks than from riskier stocks? J. Psych. Financial Markets 2(4) 176-181.
36. _, M. Statman. 1995. Making sense of beta, size, and book-to-market. J. Portfolio Management 25 26-34.
37. Simonson, I. 1989. Choice-based reasons: The case of attraction and compromise effects. J. Consumer Res. 16 158-174.
38. Slovic, P. 1975. Choice between equally valued alternatives. J. Experiment. Psych.: Human Perception Performance 1 280-287.
39. Tetlock, P. E. 1992. The impact of accountability on judgment and choice: Toward a social contingency model. Adv. Experiment. Soc. Psych. 25 331-376.
40. Tversky, A., E. Shafir. 1992. Choice under conflict: The dynamics of deferred decision. Psych. Sci. 6 358-361.
41. _, S. Sattath, P. Slovic. 1988. Contingent weighting in judgment and choice. Psych. Rev. 95 371-384.
42. Wittenbaum, G. M., G. Stasser. 1996. What's social about social cognition? Research on socially shared cognition in small groups. J. L. Nye, A. M. Brower, eds. Management Inform. Small Groups. Sage Publications, Thousand Oaks, CA, 3-28.