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Endowment effects in the field : evidence from India’s IPO lotteries
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Anagol, Santosh, Balasubramaniam, Vimal and Ramadorai, Tarun (2018) Endowment effects in the field : evidence from India’s IPO lotteries. The Review of Economic Studies, 85 (4). pp. 1971-2004. doi:10.1093/restud/rdy014 ISSN 0034-6527.
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Official URL: https://doi.org/10.1093/restud/rdy014
Abstract
We study a unique field experiment in India in which 1.5 million stock investors face lotteries for the random allocation of shares. We find that the winners of these randomly assigned initial public offering (IPO) lottery shares are significantly more likely to hold them than lottery losers 1, 6, and even 24 months after the random allocation. This finding strongly evokes laboratory findings of an “endowment effect” for risky gambles, and persists in samples of highly active investors, suggesting along with additional evidence that this behaviour is not driven by inertia alone. The effect decreases as experience in the IPO market increases, but remains even for very experienced investors. Leading theories of the endowment effect based on reference-dependent preferences are unable to fully explain these and other findings in the data.
Item Type: | Journal Article | |||||||||
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Subjects: | H Social Sciences > HG Finance | |||||||||
Divisions: | Faculty of Social Sciences > Warwick Business School | |||||||||
SWORD Depositor: | Library Publications Router | |||||||||
Library of Congress Subject Headings (LCSH): | Stocks -- India, Going public (Securities) -- India | |||||||||
Journal or Publication Title: | The Review of Economic Studies | |||||||||
Publisher: | Oxford University Press | |||||||||
ISSN: | 0034-6527 | |||||||||
Official Date: | 1 October 2018 | |||||||||
Dates: |
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Volume: | 85 | |||||||||
Number: | 4 | |||||||||
Page Range: | pp. 1971-2004 | |||||||||
DOI: | 10.1093/restud/rdy014 | |||||||||
Status: | Peer Reviewed | |||||||||
Publication Status: | Published | |||||||||
Access rights to Published version: | Restricted or Subscription Access | |||||||||
Date of first compliant deposit: | 3 May 2018 | |||||||||
Date of first compliant Open Access: | 1 February 2020 | |||||||||
RIOXX Funder/Project Grant: |
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