The Disposition Effect, Trading Biases, and Cognitive Reappraisal

Millions of people across the globe invest in financial markets, hoping to increase their wealth or income. Investing is risky of course, but some investors seem to battle not only the market but also themselves. In recent decades behavioural economics has uncovered many patterns of trading behaviour which appear to work against the investors who display them, resulting in lower investment returns. For this reason, these patterns of behaviour are regarded as trading biases. This thesis investigates two main themes that follow from the observation of trading biases in financial markets, both ultimately related to helping investors make better investment decisions. First, to what extent do individual investors reliably demonstrate trading biases? Second, why do these biases occur and can their impact be mitigated? With respect to the first theme, is there evidence that some biases have trait-like characteristics, and predict investors’ behaviour across a range of situations? This theme is related to the “state vs trait” argument from personality psychology. Applied here, the question is whether variation in trading behaviour is better explained due to environmental differences when decisions are being made (state), or because people differ in their tendencies to behave in certain ways (trait-like). If the latter, investors who tend to express biases would benefit from understanding their own decision-making patterns. Note that the claim here is not that the biases are literally traits themselves, but that they have trait-like characteristics such as intra-individual stability and construct validity. The evidence presented in this thesis suggests that the biases examined possess these characteristics because their expression depends on some underlying behavioural tendencies; these underlying tendencies may be traits, though they are not directly investigated here. With respect to the second theme, a suspected cause of many trading biases is the influence of irrelevant emotions on decision making. This thesis investigates evidence for the role of emotions in trading biases. It also investigates the use of cognitive reappraisal as a de-biasing technique (i.e. a method to reduce the level of bias displayed in trading decisions), which works by reducing emotions during trading. The main bias which this thesis examines is the disposition effect. This occurs when investors are more eager to sell gains than losses, or stated another way, when they hold losses longer than gains. So, it is a bias that affects decisions about selling, based on the profit or loss made on each stock. Although the disposition effect is widely studied in behavioural finance, it has not been demonstrated to be a persistent pattern of an investor’s trading behaviour. Experimental studies measure a mathematically defined disposition effect in the lab, but assume that this research can provide insight into the disposition effect observed in financial markets. Meanwhile cognitive reappraisal, a form of emotion regulation, has been shown to reduce the disposition effect, but only in students and only using lab conditions that lack ecological validity. Furthermore, the mechanism for reappraisal’s effect has not been investigated. As well as investigating whether the disposition effect has trait-like characteristics, it also examines the “constituent biases” of the disposition effect, cutting gains and holding losses. Though the disposition effect is defined as a difference between selling gains and losses, the two are treated as two sides of the same behaviour rather than two separate trading patterns. This thesis argues that these constituent biases should be treated as separate biases, rather than two aspects of a unitary disposition effect. Building on the first theme, the constituent biases are also assessed for trait-like characteristics; building on the second theme, the effect of cognitive reappraisal on each constituent bias is examined. This thesis contains three studies, two involving retail investors and one with an adult novice sample. All three involve measuring trading biases with an ecologically realistic trading simulation, played multiple times. The two studies with retail investors also include a disposition effect scale. Cognitive reappraisal is tested in one of the two studies with retail investors and in the study with novices. I contribute to the literature in establishing that the disposition effect has trait-like characteristics aspects, by showing that it can be reliably measured in both an ecologically valid trading simulation and a self-report scale, and that these link to real-world trading behaviour. Furthermore, I show that the disposition effect is not a unitary bias but that its two constituent biases, cutting gains and holding losses, are independent of each other. They too have trait-like characteristics, and can also be reliably measured using the same ecologically valid trading simulation. However, levels of each bias in investors are not associated with each other. This contrasts with the conventional approach to the disposition effect that treats them as opposite sides of a unitary bias. I argue they are independent biases which are measured together in the disposition effect. Furthermore, as independent biases they are likely to be underpinned by different underlying traits. I build on the existing literature by showing that the disposition effect occurs in retail investors using this trading simulation. I find that cognitive reappraisal reduces the disposition effect, while I make improvements in the external validity of this test in both the measurement of the disposition effect and participants used. I extend knowledge of emotion regulation and trading biases by showing that cognitive reappraisal reduces the disposition effect by decreasing the tendency to hold losses. Lastly, I show that cognitive reappraisal is not effective under the same conditions in novices (as opposed to retail investors). This reminds us of the merit of testing de-biasing techniques with greater ecological validity, and suggests that implementing de-biasing techniques in real world decision making may be more difficult than it first appears

Does Race Matter? - Outcomes of the First Year Experience in a Canadian University

Canadian cities are experiencing increasing ethnic and racial diversity. As a result there is a growing concern with the degree to which Canadian institutions meet the needs of a heterogeneous population. Despite this concern, as yet, there have been no systematic studies of race relations on Canadian campuses and the degree to which outcomes of the university experience are affected by race. Data for the current study were collected at York University through a survey of 1,093 students at the time of entry in September and a survey of 1,129 students conducted in February/March of the first year. Data analysis focuses on the background characteristics of students of various races, their social and academic involvement and classroom experiences, outcomes of the first year in university, and the degree to which race affects both experiences and outcomes. It is found that in general students of non-European origins come from families with different socio-economic characteristics than those of European descent. In addition, the nature of the university experience varies by minority status and/or race. Comparisons, however, do not always favour students of European origin. Finally, although some outcomes of the first year experience - self-assessed intellectual development and knowledge, grade point averages, and intentions to return to the university - vary by racial group; race per se explains little, if any, of the total variance. In essence, there is a considerable degree of equality in outcomes so far as race is concerned. Explanations for differences in outcomes are to be found in classroom experiences, contacts with faculty etc., and academic involvement.Les villes canadiennes connaissent actuellement une croissance importante de la diversité ethnique et raciale. On se demande toujours jusqu 'à quel point les universités canadiennes répondent aux besoins d'une population hétérogène. En dépit de cette appréhension, toutefois, il n'y a pas eu une seule étude systématique ni sur les relations raciales dans les campus canadiens ni sur l'importance de la question raciale dans la vie universitaire. Les données de l'étude que nous menons actuellement ont été recueillies à l'université York grâce à un sondage mené auprès de 1.093 étudiants au moment de la rentrée en septembre et à un autre sondage mené auprès de 1.129 étudiants en février-mars de la première année. L'analyse des données se concentre sur les antécédents des étudiants de diverses races, leur participation à la vie sociale et académique, leur expérience en classe, leurs résultats de la première année universitaire ainsi que sur l'importance de la question raciale dans leur vie étudiante. Il a été établi qu'en général, les étudiants d'origine non européenne viennent de familles dont les caractéristiques socio-économiques sont plus variées que ceux d'origine européenne. De plus, la nature de leur expérience universitaire varie selon la minorité ethnique et raciale à laquelle ils appartiennent. Des comparaisons, toutefois, ne favorisent pas toujours les étudiants d'origine européenne. Finalement, bien que certains résultats de l'expérience de la première année, tels que le développement intellectuel et la connaissance acquise (évalués par les étudiants eux-mêmes), les moyennes de réussite scolaire et les intentions de poursuivre des études universitaires, varient selon le groupe racial, l'appartenau raciale à elle seule explique très peu toute la variance. En somme, il y a un degré considérable d'égalité dans les résultats si on prend seulement la question raciale en considération. Les explications des différences de résultats doivent être trouvées dans l'expérience en classe, dans les contacts avec le corps enseignant, etc. ainsi que dans la participation à la vie académique

Place of Residence, Student Involvement, and First Year Marks

Research conducted in the United States has shown that students living in residence have greater gains in areas such as intellectual development, and are more likely to stay in university and complete their degrees, than students who live off-campus. The enhanced student involvement of those in residence is often cited in explanation for positive outcomes such as these. While there are some dissenting voices, research has also demonstrated that place of residence has little, if any, impact on marks. In a study of York University, a large commuter university, it is shown that place of residence does affect student involvement and first year marks; however, after controlling for OAC marks and faculty of enrollment, the first year marks of students who live at home with parents are higher than those of students in residence. Part of the explanation for this phenomenon can be found in the fact that despite their place of residence off-campus and low involvement in some activities, students living with their parents have higher rates of classroom involvement than students living in residence. In essence, living off-campus with parents does not represent a disadvantage in terms of first year marks.Une recherche effectuée aux États-unis a montré que les étudiants vivant en résidence retirent davantage, notamment sur le plan du développement intellectuel, et sont plus susceptibles de terminer leurs études universitaires que ceaux qui demeurent à l'extérieur du campus. On explique souvent ces résultats positifs par la forte participation de ces étudiants à la vie universitaire. En dépit de certains avis divergents, la recherche a aussi montré que le lieu de résidence a peu ou pas d'influence sur les notes des étudiants. Une étude sur l'université York, où un grand nombre d'étudiants vivent hors campus, a montré que le lieu de résidence influe sur la participation et sur les notes de première année. Toutefois, après avoir contrôle les notes obtenues par les étudiants au CPO et la faculté à laquelle ils étaient inscrits, il a été possible d'observer que les notes des étudiants de première année qui vivaient chez leurs parents étaient plus élevées que celles de ceux qui vivaent en résidence. Cette constatation peur en partie s'expliquer par le fait que, malgré leur lieu de résidence et leur faible participation à certaines activités, les étudiants vivant chez leurs parents présentent un taux de participation en classe plus élevé que leurs collègues vivant en résidence. Essentiellement, le fait de vivre au domicile familial ne représente pas un désavantage eu égard aux notes obtenues en première année

First Year Science in a Commuter University: Where to Intervene

A study of first year science students in a large Canadian commuter university shows that integration/involvement variables are important in explaining a number of desired outcomes. Most evident is the fact that students who were satisfied with the quality of instruction, and students who felt that topics covered in classes were important to future career success, were more likely than others to score high on a number of desired outcomes. By way of comparison, variables falling in the social integration/involvement category, by and large, were not important in explaining desired outcomes. For example, in contrast to previous findings on factors affecting student development, the number of out- of-class contacts with faculty had no impact on any of the outcomes under consideration Overall, the findings, and possible avenues of improvement that they suggest, reflect the fact that in a large commuter university classroom contact represents the main link between the institution and the individual. As a result, it is likely that improvements in curriculum and teaching would have large payoffs for both students and the institution. The university under study is a commuter university in a large city with large first year science classes. Where similar conditions can be found in other Canadian universities, it is likely that various outcomes can be explained by reference to similar factors. By extension, it is equally probable that changes likely to enhance outcomes would also lead to improvements elsewhere.D'après une enquête menée dans une grande université canadienne auprès d'étudiant(e)s de première année en sciences, on constate que les variables intégration/participation son déterminantes afin d'obtenir certains résultats souhaités. De toute évidence, les étudiant(e)s qui sont satisfait(e)s de la qualité de l'enseignement et ceux et celles qui croient que les sujets abordés en classe amélioreront leurs chances de succès pour leurs futures carrières sont plus susceptibles que d'autres d'atteindre de hautes performances quant à certains résultats souhaités. En comparaison, les variables qui tombent dans la catégorie sociale participation/intégration ne sont pas vraiment importantes pour expliquer les résultats escomptés. Par exemple, en contraste avec les découvertes antérieures sur les facteurs qui modifient le développement des étudiant(e)s, on a constaté que le nombre de contacts hors-classes avec les professeur(e)s n'avait aucun impact sur les résultats à l'étude. En général, les résultats de cette étude et les possibilités d'amélioration qui en découlent, démontrent que dans une grande université, les contacts établis en classe représentent le lien principal entre l'institution et l'individu. En conséquence, il est probable qu 'une amélioration des programmes scolaires et de l'enseignement bénéficierait grandement à la population étudiante ainsi qu'à l'institution. L'université qui a servi de modèle pour cette enquête est située dans une grande ville et elle comporte de larges classes de première année en sciences. Si l'on retrouvait des conditions semblables dans d'autres universités canadiennes, il est probable que les résultats attendus des étudiant(e)s s'expliqueraient à partir de facteurs similaires. On peut donc déduire qu'il est également probable que des changements qui donneraient des résultats positifs ici puissent donner lieu à une amélioration ailleurs

The Performance of "Gifted" High School Students in University

In Ontario, school boards are required to provide opportunities so that "gifted" students (i.e., those with exceptional abilities) can obtain learning experiences that are beyond those offered in regular classes. This study follows graduates of regular and gifted programs over four years of studies at York University in Toronto. Overall, it is found that having participated in a gifted program in high school does not result in increased levels of achievement in university; however, graduates of gifted high school programs have slightly higher self-assessed thinking and reasoning and problem-solving skills and are marginally faster in credit completion than other students. These findings aside, it is difficult to argue that participation in a high school gifted program confers an advantage students once they get to university.En Ontario, les conseils scolaires doivent donner l'occasion aux élèves surdoués (c'est-à-dire, ceux qui ont des capacités exceptionnelles) d'apprendre au delà de ce qui est offert dans les classes régulières. Dans le cadre de cette étude, nous avons suivi de près les diplômés des programmes réguliers et spéciaux (prévus pour les élèves surdoués) pendant quatre ans à l'Université York de Toronto. Dans l'ensemble, il a été trouvé que la participation dans un programme spécial à l'école secondaire ne donne pas nécessairement une augmentation du rendement à l'université; toutefois, les diplômés d'un programme spécial sont légèrement plus compétents en autoévaluation, raisonnement et résolution de problèmes et un peu plus rapides que les autres étudiants dans l'obtention de crédits pour terminer leurs études. Mis à part ces résultats, il est difficile de démontrer que les élèves ayant participé à un programme spécial sont mieux préparés pour faire des études universitaires

The Relationship Between Grades and Academic Program Satisfaction Over Four Years of Study

It is frequently assumed that the student experience, and, by implication, student program satisfaction, improves over the course of a university education. A four-year panel study of students at a large commuter university indicates some improvements in assessments of professor performance and GPA between first and fourth year; however, satisfaction with academic programs remains more or less the same across all four years of study. Structural equation modelling was employed to estimate the relationships among professor performance, GPA, and program satisfaction within, and between, each of the four years of study. Contrary to expectations based on some conventional models, it was found that students' assessments of professors were not affected by GPA; conversely, professor performance had little impact on GPA. By contrast, student satisfaction was related to both GPA and professor performance. The greatest predictor of students' program satisfaction, however, was neither GPA nor professor performance, but program satisfaction in the previous year. This finding suggests that underlying personality characteristics likely are more responsible for expressions of program satisfaction than either GPA or professor performance.On suppose souvent que l'expérience de l'étudiant et dès lors, sa satisfaction à l'égard du programme, s'améliore au cours de ses études universitaires. Sur une période de quatre, l'étude réalisée auprès d'un groupe d'étudiants d'une grande université à population majoritairement externe montre une certaine amélioration de l'évaluation de la performance des professeurs et de la MPC entre la premièreet la quatrième année, mais la satisfaction à l'égard du programme universitaire reste à peu près la même pendant les quatre années de l'étude. Nous avons utilisé la modélisation par équation structurelle pour estimer le rapport entre la performance du professeur, la MPC et la satisfaction à l'égard du programme dans les quatre années d'études et d'une année à l'autre. Contrairement aux attentes fondées sur quelques modèles conventionnels, nous avons constaté que la MPC n'influençait pas la cote donnée au professeur par l'étudiant; réciproquement, la performance du professeur avait peu d'effet sur la MPC. La satisfaction de l'étudiant,en revanche, était liée à la fois à la MPC et à la performane du professeur. Le meilleur prédicteur de la satisfaction d'un étudiant à l'égard du programme, toutefois, n'était ni la MPC ni la performance du professeur, mais la satisfaction exprimée à l'égard du programme l'année précédente. Cette conclusion suggère que les traits de personnalité sous-jacents sont probablement plus responsables de la satisfaction exprimée à l'égard du programme que la MPC et la performance du professeur

Introducing computer-marked tests in an online Financial Accounting course: patterns in academic performance and approaches to assessment design

In the last two decades online computer-marked assignments (CMAs) have been widely used in accounting education. Although there is a growing body of research on this form of online assessment, most of the previous studies relied on small samples of respondents or focused on student self-report using survey methods. This exploratory mixed-method study aims to combine a quantitative analysis of learners’ academic performance on an online Financial Accounting course with a more in-depth exploration of learner experiences using qualitative methods. The quantitative findings suggest that student previous educational qualifications, age and experience of studying a similar subject are strongly associated with CMA completion, which is also linked to scores on other pieces of assessed work. The qualitative results show that from the learners’ perspective, diversifying assessment methods, introducing low-stakes assessment activities and creating opportunities for situational interest are viewed as key aspects of online CMA design. The paper concludes with discussing the implications of the study for designing and delivering online courses in accounting, particularly in the light of the growing popularity of massive open online courses (MOOCs)

Combustion of solid fuel in very low speed oxygen streams

In reduced gravity, the combustion of solid fuel in low-speed flow can be studied. The flame behavior in this low-speed regime will fill a void in our understanding of the flow effect on combustion. In addition, it is important for spacecraft fire safety considerations. In this work, modeling and experimental work on low-speed forced-concurrent-flow flame spread are carried out. In addition, experiments on reduced-gravity buoyant-flow flame spread are performed

Biological Consequences of Tightly Bent DNA: The Other Life of a Macromolecular Celebrity

The mechanical properties of DNA play a critical role in many biological functions. For example, DNA packing in viruses involves confining the viral genome in a volume (the viral capsid) with dimensions that are comparable to the DNA persistence length. Similarly, eukaryotic DNA is packed in DNA-protein complexes (nucleosomes) in which DNA is tightly bent around protein spools. DNA is also tightly bent by many proteins that regulate transcription, resulting in a variation in gene expression that is amenable to quantitative analysis. In these cases, DNA loops are formed with lengths that are comparable to or smaller than the DNA persistence length. The aim of this review is to describe the physical forces associated with tightly bent DNA in all of these settings and to explore the biological consequences of such bending, as increasingly accessible by single-molecule techniques.Comment: 24 pages, 9 figure

Students\u27 Attitudes Toward Debt-A Study of Atkinson Faculty of Liberal and Professional Studies, York University, and Ryerson University

In Ontario, the university system has been put on notice that there will be financial consequences for those universities whose Ontario Student Assistance Plan (OSAP) default rates are greater than the norm. As a result, it is important to determine all of the factors that affect students\u27 decisions to borrow. This paper uses survey information gathered from Atkinson Faculty of Liberal and Professional Studies, York University, and Ryerson University to focus attention on the relationship between students\u27 attitudes toward going into debt to finance their university education and their actual borrowing behavior. The study found that when all else is held constant, students with positive attitudes toward debt are more likely than others to be on the OSAP