How Do Prior Outcomes Affect Risk Attitude? Comparing Escalation of Commitment and the House-Money Effect

Published Online:https://doi.org/10.1287/deca.1050.0034

References

  • Arkes Hal R., Blumer Catherine. The Psychology of sunk cost. Organ. Behavior Human Decision Processes (1985) 35:124–140CrossrefGoogle Scholar
  • Bange Mary M. Do the portfolios of small investors reflect positive feedback trading? J. Financial Quant. Anal. (2000) 35:239–255CrossrefGoogle Scholar
  • Barberis Nicholas, Huang Ming, Santos Tano. Prospect theory and asset prices. Quart. J. Econom. (2001) 116:1–53CrossrefGoogle Scholar
  • Brockner Joel. The escalation of commitment to a failing course of action: Toward theoretical progress. Acad. Management Rev. (1992) 17:39–61CrossrefGoogle Scholar
  • Brockner Joel, Rubin Jeffrey Z.Entrapment in Escalating Conflicts: A Social Psychological Analysis (1985) (Springer, New York) CrossrefGoogle Scholar
  • Coval Joshua D., Shumway Tyler. Do behavioral biases affect prices? J. Finance (2004) 60:1–34CrossrefGoogle Scholar
  • Gilad Benjamin, Kaish Stanley, Loeb Peter D. Cognitive dissonance and utility maximization. J. Econom. Behavior Organ. (1987) 8:61–73CrossrefGoogle Scholar
  • Gneezy Uri, Potters Jan. An experiment on risk taking and evaluation periods. Quart. J. Econom. (1997) 112:631–645CrossrefGoogle Scholar
  • Gneezy Uri, Kapteyn Arie, Potters Jan. Evaluation periods and asset prices in a market experiment. J. Finance (2003) 58:821–838CrossrefGoogle Scholar
  • Grinblatt Mark, Keloharju Matti. What makes investors trade? J. Finance (2001) 56:589–616CrossrefGoogle Scholar
  • Hershey Jack C., Kunreuther Howarth, Schoemaker Paul. Sources of bias in assessment procedures for utility functions. Management Sci. (1982) 28:936–954LinkGoogle Scholar
  • Johnstone David. Behavioral and prescriptive explanations of a reversed sunk cost effect. Theory Decision (2002) 53:209–242CrossrefGoogle Scholar
  • Kahneman Daniel, Tversky Amos. Prospect theory: An analysis of decision under risk. Econometrica (1979) 47:263–291CrossrefGoogle Scholar
  • Odean Terrance. Are investors reluctant to realize their losses. J. Finance (1998a) 53:1775–1798CrossrefGoogle Scholar
  • Rabin Matthew. Risk aversion and expected-utility theory: A calibration theorem. Econometrica (2000) 68:1281–1292CrossrefGoogle Scholar
  • Shafir Eldar, Tversky Amos. Thinking through uncertainty: Nonconsequential reasoning and choice. Cognitive Psych. (1992) 24:449–474CrossrefGoogle Scholar
  • Shefrin Hersh, Statman Meir. The disposition to sell winners too early and ride losers too long: Theory and evidence. J. Finance (1985) 40:777–790CrossrefGoogle Scholar
  • Staw Barry M. Knee-deep in the big muddy: A study of escalating commitment to a chosen course of action. Organ. Behavior Human Performance (1976) 16:27–44CrossrefGoogle Scholar
  • Staw Barry M., Shapira Zur. The escalation of commitment: An update and appraisal. Organizational Decision Making (1997) (Cambridge University Press)191–215Google Scholar
  • Thaler Richard H., Johnson Eric J. Gambling with the house money and trying to break even: The effects of prior outcomes on risky choice. Management Sci. (1990) 643–660LinkGoogle Scholar
  • Tversky Amos, Kahneman Daniel. Belief in the law of small numbers. Psych. Bull. (1971) 76:105–110CrossrefGoogle Scholar
  • Tversky Amos, Kahneman Daniel. The framing of decisions and the psychology of choice. Science (1981) 211:453–458CrossrefGoogle Scholar
  • Tversky Amos, Kahneman Daniel. Advances in prospect theory: Cumulative representation of uncertainty. J. Risk Uncertainty (1992) 5:297–323CrossrefGoogle Scholar
  • Weber Martin. Decision making with incomplete information. Eur. J. Oper. Res. (1987) 28:44–57CrossrefGoogle Scholar
  • Weber Martin, Camerer Colin F. The disposition effect in securities trading: An experimental analysis. J. Econom. Behavior Organ. (1998) 33:167–184CrossrefGoogle Scholar
INFORMS site uses cookies to store information on your computer. Some are essential to make our site work; Others help us improve the user experience. By using this site, you consent to the placement of these cookies. Please read our Privacy Statement to learn more.