The Influence of Affective Reactions on Investment Decisions

Abstract

The present research aims to show how investors’ affective reactions toward a fund influence their decision to sell the investment. Participants were presented with either a socially responsible or a traditional fund. After completing a mental images task, participants were asked to state the price at which they were willing to sell the fund and their confidence in future positive performance. Participants were willing to sell the fund at different prices depending on their affective reactions. The affective reactions also influenced participants’ confidence. Furthermore, we found that the socially responsible fund induced a more positive reaction than the ordinary fund.