Moored Minds: An Experimental Insight into the Impact of the Anchoring and Disposition Effect on Portfolio Performance
Round 1
Reviewer 1 Report
Review of the Manuscript jrfm - 2489139/26.06.2023 „Moored Minds: An Experimental Insight into the Impact of Anchoring & Disposition Effect on Portfolio Performance” for the Journal of the Risk and Financial Management.
General Comments
From my point of view, it is a very interesting topic and simultaneously it seems that to the best of my knowledge is the first research which empirically explores a quasi-experimental design, allowing subjects to engage in interactive trading with four securities, two with potential negative returns and two with potential positive returns, within a simulated asset market. The results show the presence of the disposition effect and anchoring bias among individual investors in India. In the same time market scenarios or volatility can influence the investors’ behavioral biases.
The paper consists of the following sections: Introduction, Literature Review, Experiment Design, Results and Findings, Reliability and Validity of the study, Discussion and Conclusion
However, I find some recommendations:
1. The abstract must contain the main purpose of the paper, the research method used in the research and the main contributions.
2. It would be very useful to add in the "Introduction" section the purpose, objectives and hypothesis of the research. I consider that a weak point of the paper is that the authors did not show the novelty of the paper compared to other works. That is why, I consider that the introduction should specify the novelty of the paper compared to other papers published in this area.
3. The research is well based on science and the results are in agreement with the theoretical part. All these methods are the strength points of this paper.
4. I think that the sample is too small (only 40 observations).
5. I recommend the authors to present at least an econometric model based on the data selected in the sample and which would improve the quality of the paper.
6. It is very important for the authors to analyze the correlation between the variables and to explain the number of items taken into account both in the descriptive analysis (with values mean, median, min, max, standard deviation, Kurtosis test, Jarque Berra test and interpretation, Skewness and Kurtosis interpretation) and in the correlation analysis.
7. I consider that the correlation analysis and the VIF test are very important in this research.
8. In the same time, in the Results and Findings section the authors have to apply an econometric method like regression or panel with fixed effect estimation or the random effect estimation (see for instance, Baltagi (2008), Hsiao (2014) and Andre B et al. (2015)). Besides, the corresponding tests to determine which is the best method of estimation is needed (see the Hausman test, the Breusch and Pagan (1980)´s Lagrange multiplier, the F test for fixed effects to test whether all unobservable individual effects are zero).
9. The authors talk about the relationship between these variables, however they do not support the empirical evidence providing panel cointegration tests that are crucial (see for instance Kao (1999) panel data cointegration test, the Pedroni (1999, 2004) panel data cointegration test or the Westerlund (2005) panel data cointegration test, among others).
10. I think that Conclusions section must to be extended.
11. I recommend the authors to present the Literature review section immediately after the Introduction section. There is also an error in the numbering of the sections, section number 3 being numbered twice.
12. I think that the literature needs to be improved with other recent works. That is why I recommend the authors to refer to other recent works indexed in Web of Science, Scopus, Emerald and Cambrige Journals. We suggest that the authors cite the paper published in Journals, such as:
- Batrancea L.M., Nichita R.A., Batrancea I. (2012), Tax Non-Compliance Behavior in the Light of Tax Law Complexity and the Relationship between Authorities and Taxpayers, Annals of the Alexandru Ioan Cuza University-Economics, 59(1), pp.97–106.
In conclusion, the article should be improve. It should also be enhanced with a review of the literature adequate to the subject and a broader interpretation and commentary of the research results.
The results of the research presented in the paper are valuable and should be presented to the scientific audience in the economic theory and practice. The paper can be published in Journal of Risk and Financial Management after minor revisions.
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The Manuscript needs careful English proofreading because there are some shortcomings. For instance, the article “the” is sometimes missing in front of nouns, the message in some paragraphs is not clear enough.
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Author Response
Dear Sir/Ma'am,
Please see the attachment.
Author Response File: 
Author Response.docx
Reviewer 2 Report
- Advantages and benefits of the proposed approach should be given in detail. Also, the research gaps and the novelty of this study is not clear.
- Please reason both the novelty and the relevance of your paper goals. Clearly discuss what the previous studies that you are referring to. What are the Research Gaps/Contributions? Please note that the paper may not be considered further without a clear research gap and novelty of the study.
- The characteristics of current research should be highlighted in the comparative table of literature review from both aspects of theoretical and application. In other words, a comprehensive literature review as well as research gaps should be summarized in in the comparative table.
- What is the current specific knowledge gap? What implication can be referred to? The above questions should be answered. Authors need to propose their study.
- Generally, real world data are tainted by uncertainty. The authors should discuss the proposed approach under data uncertainty.
- The authors should compare their results and proposed approach with popular approaches in literature. In other words, I recommend strengthening the comparison with previous research.
- Literature review and references should be updated according to recent studies (2021-2023).
- Please make sure your conclusions' section underscore the scientific value added of your paper, and/or the applicability of your findings/results, as indicated previously.
- Please revise your conclusion part into more details. Basically, you should enhance your contributions, limitations, underscore the scientific value added of your paper, and/or the applicability of your findings/results and future study in this session. The discussion is relatively simple and insufficient.
Minor editing of English language required.
Author Response
Dear Sir/Ma'am,
Please see the attachment.
Author Response File: Author Response.docx
Reviewer 3 Report
-The research question is well-defined in the introduction section with an analytical literature review.
- The paper deals with the disposition effect and anchoring bias which are cognitive biases that can influence decision-making. To be able to make a rational and informed choices a research on it is essential for an emerging market like an India.
-The disposition effect refers to the tendency of selling the investment tool early. The anchoring bias is the tendency of investors relying on an anchor. To understand the decision biases, the paper benefits from the quasi-experimental design and has a contribution to the literature in terms of experimental analysis. Regression method and games are used the measure the effects.
English Language of the text is sufficient.
Author Response
Dear Sir/Ma'am,
Please see the attachment.
Author Response File: Author Response.docx
Round 2
Reviewer 2 Report
Accept in present form
Minor editing of English language required
