Dong Hong, Roger K. Loh, and Mitch Warachka
Using unique real estate data that allow for accurately-measured gains, we examine whether sell propensities depend on the magnitude of a seller’s gain. We find that sell propensities are flat over losses and increasing in gains. Consistent with their higher sell propensities, selling prices are lower for properties with larger gains. Large-sized stock investments also have sell propensities that are flat over losses and increasing in gains, although the sell propensities of typical stock investments are V-shaped (Ben-David and Hirshleifer (2012)). Our findings support the realization utility theories of Barberis and Xiong (2012) as well as Ingersoll and Jin (2013).