TY  - JOUR
AB  - Purpose– The purpose of this paper is to conduct a controlled experiment to examine the effect of goal setting and affect framed feedback on repeated asset allocation investment decisions.Design/methodology/approach– The design of the experiment is a 2×2 between subject design. Subjects allocated monies among four investments for 20 periods. One manipulation varied whether subjects received performance feedback in the form of a happy or sad face, while another manipulation varied whether subjects set a financial goal for themselves and received goal attainment performance feedback.Findings– The main findings include: subjects initially allocate assets in a manner roughly consistent with their stated preference for risk; prior year asset performance leads subjects to make significant changes in portfolio asset allocation in a manner consistent with beliefs of positive autocorrelation in asset returns; and the addition of happy or sad faces to performance feedback information leads to even greater changes in asset allocation.Originality/value– Using ideas from the theory on the self‐regulation of behavior and the role of affect in decision making, the authors develop an original framework to account for the results.
VL  - 38
IS  - 11
SN  - 0307-4358
DO  - 10.1108/03074351211266766
UR  - https://doi.org/10.1108/03074351211266766
AU  - Sundali James A.
AU  - Stone Gregory R.
AU  - Guerrero Federico L.
PY  - 2012
Y1  - 2012/01/01
TI  - The effect of setting goals and emotions on asset allocation decisions
T2  - Managerial Finance
PB  - Emerald Group Publishing Limited
SP  - 1008
EP  - 1031
Y2  - 2024/04/18
ER  -