Loughborough University
Browse

When do investors gamble in the stock market?

Download (952.85 kB)
journal contribution
posted on 2021-10-18, 13:04 authored by Pu Gong, Zhuzhu Wen, Xiong Xiong, Cynthia GongCynthia Gong
Recent studies have uncovered gambling-motivated trading activities in financial markets in which investors seek lottery-type payoffs by using financial assets. Building on prospect theory, this study provides an important complement to prior research and investigates what period that investors make gambling-motivated trading in the stock market. Examining data from the Chinese stock market, investors are revealed to have asymmetric gambling preferences in gain and loss domains. Investors’ gambling motivations are more easily triggered when the market is experiencing a loss. In such periods of time, investors may preferentially opt for lottery-type stocks that offer them a small chance to earn an extreme return at the risk of a likely small loss, simply due to their ‘aversion to a sure loss’.

Funding

National Natural Science Foundation of China (Grant #71991473 and #71671076)

History

School

  • Business and Economics

Department

  • Economics

Published in

International Review of Financial Analysis

Volume

74

Publisher

Elsevier BV

Version

  • AM (Accepted Manuscript)

Rights holder

© Elsevier

Publisher statement

This paper was accepted for publication in the journal International Review of Financial Analysis and the definitive published version is available at https://doi.org/10.1016/j.irfa.2021.101712

Acceptance date

2021-02-08

Publication date

2021-02-13

Copyright date

2021

ISSN

1057-5219

Language

  • en

Depositor

Dr Cynthia Gong. Deposit date: 14 October 2021

Article number

101712

Usage metrics

    Loughborough Publications

    Exports

    RefWorks
    BibTeX
    Ref. manager
    Endnote
    DataCite
    NLM
    DC