| Summary: | 博士 === 國立政治大學 === 財務管理研究所 === 95 === In the first essay, we document support for the narrow framing effect proposed by Kahneman and Tversky (1981). Our findings that traders in an options market frame complicated investment decisions into the simpler ones support the narrow framing effect. Traders’ professionalism, sophistication and trading experience are negatively related with the degree of narrow framing, implying that these factors help to reduce investors’ behavioral bias. Our study bridges the gap between the psychological literature and financial literature in terms of the relationship between experience/sophistication and narrow framing. The results of this paper shed light on the decision-making process in an options market.
In the second essay, complementary to Lim (2006)’s findings in regards to stocks market, we also claim that in a much more complex derivatives market, traders tend to frame gains and losses asymmetrically by editing or evaluating their outcomes into different accounts. Nevertheless, different from Thaler’s mental accounting theory (1985), we find investors are more susceptible to segregating losses and integrating gains when they liquidate their positions. Our empirical evidence shows that they also have asymmetry in the propensity to liquidate multiple options. The current study sheds a light on how investors perceive, categorize, evaluate and engage their outcomes in financial activities, in addition, under what circumstances investor integrate or separate their investment profits. The fact that investors’ responses to edit their outcomes vary across countries and securities markets highlights the complexity of human behavior and calls for further studies on a broader range of financial markets.
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