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Analysing the impact of online news sentiment on individualsʼ sequential trading decisions

Analysing the impact of online news sentiment on individualsʼ sequential trading decisions
Analysing the impact of online news sentiment on individualsʼ sequential trading decisions
Several empirical studies have reported that the consequences of prior actions can affect subsequent risky decisions. However, little work has investigated how the news environment in which prior actions were taken alters the impact of prior consequences. In this study, we examine to what extent the effects of individual traders’ prior gains on their subsequent trade size are contingent on different news sentiment environments in which these gains were secured. The results are derived from an individual-level trading dataset containing details of 285,725 trades of 4,857 traders between 2004 and 2013, complemented by a news archive that contains over 20 million news items. We find that individuals increase trade size following prior gains, but the magnitude of the increase depends on the type of the news sentiment environment - amplified/reduced by the news sentiment that was consistent/inconsistent with the prior decisions that generated gains. We suggest the news environment affects individual sequential risky decisions through its effects on emotions – prior gains lead an individual to have positive emotions, and the emotions are amplified/reduced when the individual receives positive/negative feedback from the news sentiment that is consistent/inconsistent with the gain-generating trading decisions. This study contributes to the literature on the roles of contexts and emotions in decision-theory models.
Behavioral operational research, Decision theory and analysis, Risk analysis and management
He, He
299f30cf-27cc-41bc-9bba-2d88637963f8
Ma, Tiejun
1f591849-f17c-4209-9f42-e6587b499bae
Sung, Ming-Chien
2114f823-bc7f-4306-a775-67aee413aa03
Johnson, Johnnie E.V.
674f4c91-b889-4566-82cd-c0a33b4beaac
He, He
299f30cf-27cc-41bc-9bba-2d88637963f8
Ma, Tiejun
1f591849-f17c-4209-9f42-e6587b499bae
Sung, Ming-Chien
2114f823-bc7f-4306-a775-67aee413aa03
Johnson, Johnnie E.V.
674f4c91-b889-4566-82cd-c0a33b4beaac

He, He, Ma, Tiejun, Sung, Ming-Chien and Johnson, Johnnie E.V. (2021) Analysing the impact of online news sentiment on individualsʼ sequential trading decisions. 22nd Conference of the International Federation of Operational Research Societies, , Seoul, Korea, Democratic People's Republic of. 23 - 27 Aug 2021. (In Press)

Record type: Conference or Workshop Item (Other)

Abstract

Several empirical studies have reported that the consequences of prior actions can affect subsequent risky decisions. However, little work has investigated how the news environment in which prior actions were taken alters the impact of prior consequences. In this study, we examine to what extent the effects of individual traders’ prior gains on their subsequent trade size are contingent on different news sentiment environments in which these gains were secured. The results are derived from an individual-level trading dataset containing details of 285,725 trades of 4,857 traders between 2004 and 2013, complemented by a news archive that contains over 20 million news items. We find that individuals increase trade size following prior gains, but the magnitude of the increase depends on the type of the news sentiment environment - amplified/reduced by the news sentiment that was consistent/inconsistent with the prior decisions that generated gains. We suggest the news environment affects individual sequential risky decisions through its effects on emotions – prior gains lead an individual to have positive emotions, and the emotions are amplified/reduced when the individual receives positive/negative feedback from the news sentiment that is consistent/inconsistent with the gain-generating trading decisions. This study contributes to the literature on the roles of contexts and emotions in decision-theory models.

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More information

Accepted/In Press date: 2021
Venue - Dates: 22nd Conference of the International Federation of Operational Research Societies, , Seoul, Korea, Democratic People's Republic of, 2021-08-23 - 2021-08-27
Keywords: Behavioral operational research, Decision theory and analysis, Risk analysis and management

Identifiers

Local EPrints ID: 450316
URI: http://eprints.soton.ac.uk/id/eprint/450316
PURE UUID: 98c59a1f-d58c-482a-84bc-f8bdc2698119
ORCID for Ming-Chien Sung: ORCID iD orcid.org/0000-0002-2278-6185

Catalogue record

Date deposited: 22 Jul 2021 16:31
Last modified: 13 Dec 2021 03:24

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Contributors

Author: He He ORCID iD
Author: Tiejun Ma
Author: Ming-Chien Sung ORCID iD
Author: Johnnie E.V. Johnson

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