TY - JOUR
T1 - Winners and losers in investment competition – Experimental study
AU - Afik, Zvika
AU - Dafna, Hofit Hamrani
AU - Lahav, Yaron
N1 - Publisher Copyright:
© 2024 Elsevier Inc.
PY - 2024/3
Y1 - 2024/3
N2 - We report the results of lab experiments on investment competition, where all subjects receive their accumulated earnings and the subject with the highest returns earns an additional bonus. We find that ranking is negatively correlated with portfolio risk: when subjects realize that their rank is relatively low, they increase their portfolio risk. This behavior is shared by all subjects in all rankings during all trade periods, regardless of the risk-free rate. Furthermore, in a competition, subjects respond to rank changes, increasing (decreasing) their portfolio risk after experiencing a decrease (increase) in their rating, regardless of their ranking.
AB - We report the results of lab experiments on investment competition, where all subjects receive their accumulated earnings and the subject with the highest returns earns an additional bonus. We find that ranking is negatively correlated with portfolio risk: when subjects realize that their rank is relatively low, they increase their portfolio risk. This behavior is shared by all subjects in all rankings during all trade periods, regardless of the risk-free rate. Furthermore, in a competition, subjects respond to rank changes, increasing (decreasing) their portfolio risk after experiencing a decrease (increase) in their rating, regardless of their ranking.
KW - Investment competition
KW - Investment decision
KW - Portfolio choice
KW - Portfolio risk
KW - Ranking
KW - Relative performance
UR - http://www.scopus.com/inward/record.url?scp=85183118197&partnerID=8YFLogxK
U2 - 10.1016/j.frl.2024.105019
DO - 10.1016/j.frl.2024.105019
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AN - SCOPUS:85183118197
SN - 1544-6123
VL - 61
JO - Finance Research Letters
JF - Finance Research Letters
M1 - 105019
ER -