Understanding the House Money Effect: A Systematic Review

Title

Understanding the House Money Effect: A Systematic Review

Creator

Aravind A.S.; Pullot L.

Description

The house money effect is the tendency of individuals to exhibit risk-seeking behavior after a prior gain. Individuals differentiate their perceived gains with own money. This behavioral bias influences human behavior in future decision-making. This review examines the implications of the house money effect on an individual investors financial decision-making. Our study adopts a systematic review approach to understand and extensively synthesize the existing literature. The study considered 34 articles from the Scopus database. The study provides an overview of the literature regarding theories, methodology, research opportunities, and developments in the house money effect. The study points out the situational factors influencing the house money effect and the association of the bias with other behavioral biases. This review identifies the gaps in the literature and provides directions for future research to deepen the understanding of the effect of house money on individual investors. This study builds a strong framework for future research. The Author(s), under exclusive license to Springer Nature Switzerland AG 2024.

Source

Studies in Big Data, Vol-159, pp. 601-610.

Date

2024-01-01

Publisher

Springer Science and Business Media Deutschland GmbH

Subject

Behavioral bias; House money effect; Investment behavior; Risk-taking behavior; Systematic review

Coverage

Aravind A.S., CHRIST University, Bengaluru, India; Pullot L., CHRIST University, Bengaluru, India

Rights

Restricted Access

Relation

ISSN: 21976503

Format

Online

Language

English

Type

Book chapter

Identifier

https://doi.org/10.1007/978-3-031-71213-5_52

https://www.scopus.com/inward/record.uri?eid=2-s2.0-85210174882&doi=10.1007%2f978-3-031-71213-5_52&partnerID=40&md5=cf9679952dafc2f73fb1de9235f1c7a7