| Summary: | This
paper
is
intended
to
examine,
compare,
and
justify
the
degree
of
disposition
effect
present
in
individuals
of
three
different
cultures,
Chinese,
Indian
and
Arab.
␣␣␣␣ ␣␣␣␣␣␣␣␣ ␣␣␣␣␣ ␣␣␣␣␣␣␣␣␣␣ ␣␣␣ ␣␣␣ ␣␣␣␣␣␣␣␣␣␣␣␣ ␣␣␣␣␣␣␣␣ ␣␣␣␣␣␣␣␣ has
a
significant
influence
on
the
degree
of
disposition
effect,
that
is,
the
fact
that
investors
seem
to
hold
on
to
their
losing
stocks
to
a
greater
extent
than
they
hold
their
winning
stocks.
We
examine
the
effect
of
culture
on
this
behavioural
phenomena
using
a
devised
excel
program
game
that
replicates
a
real
stock
market
environment.
As
a
control
procedure,
we
made
sure
that
all
participants
in
our
experiment
had
a
background
in
finance
and
share
the
same
demographics
in
terms
of
age,
experience,
and
occupation
(University
students).
Our
experiment
was
designed
to
capture
the
degree
of
disposition
effect
exhibited
using
a
measure
that
compares
net
realized
gains
to
net
realized
losses
for
each
participating
subject.
This
is
the
same
measure
used
by
Weber
and
Camerer
in
their
study
of
disposition
effect
in
1997.
Using
subjects
from
China,
India,
and
Palestine
in
our
experiment,
we
found
that
the
disposition
effect
exists
and
is
similar
between
all
three
cultures.
After
analysing
our
results
further
using
Stata
software,
a
statistical
tool,
we
again
found
that
culture
does
not
have
a
significant
effect
on
the
disposition
effect.
However,
we
discovered
that
Chinese
and
Indian
cultures
vary
the
most
in
term
of
the
disposition
effect
they
exhibit.
Yet,
this
observation
is
not
significant
given
the
fact
that
the
variance
is
not
large
enough
for
us
to
conclude
that
culture
has
a
substantial
impact
the
on
the
disposition
effect.
|
|---|