You are here


Individual investors' decision-making: The ubiquitous influence of promotion and prevention self-regulation

Rongrong Zhou, 2002
Faculty Advisor: Michel Tuan Pham


This dissertation examines the central thesis that individual investors' decisions can be usefully studied from a self-regulation perspective. I investigate the influence of self-regulatory systems known as promotion (which reflects the fundamental human need for advancement and growth) and prevention (which reflects the fundamental need for safety and security) on investment decisions. Specifically, I argue that different financial products differentially trigger promotion versus prevention self-regulation. Some financial products prime implicit goals that are primarily promotion-focused, whereas others prime implicit goals that are primarily prevention-focused. As a result, decisions involving these products are carried out with a distinct promotion or prevention orientation.

I test these predictions in eight studies among approximately 1,800 real-world individual investors. A pilot study provides initial evidence that investors indeed associate different investments with distinct regulatory focuses. This pilot study also relates these differences to various predictors such as income and investment experience. Study 1 shows that when investors are primed with a promotion focus or prevention focus, they are inclined to allocate money to investment accounts and invest in assets more compatible with that particular goal. Study 2 shows that, in decisions involving financial products tagged with a promotion focus, investors show disproportionate concerns for potential gains whereas in decisions involving products tagged with a prevention focus, investors show disproportionate concerns for potential losses. Study 3 shows that investors' sensitivity to past paper gains and paper losses in selling decisions are differentially shaped by promotion and prevention focus. Study 4 and Study 5 test the hypothesis that depending on whether the money one invests with comes from an account tagged with a promotion focus or from one tagged with a prevention focus, investors demonstrate different risk propensities in their investment decisions. Study 6 attempts to disentangle the effects of regulatory focus and risk attitude in financial decision-making. Study 7 is a stock trading simulation designed to examine how regulatory focus affects different aspects of trading behavior. These eight studies are discussed and directions for future research are suggested.

Application Deadlines

Master of Science in Marketing >

For Fall 2016 Entry:

Available: August 1st, 2015
Deadline: January 4th, 2016


Master of Science in Financial Economics >

For Fall 2016 Entry:

Available: August 1st, 2015
Deadline: January 4th, 2016


Master of Science in Management Science and Engineering >

For Fall 2016 Entry:
To be determined


Available 8/1/15
Sept 2016

Deadline: 01/05/16

MS Marketing
Deadline: 01/04/16

MS Financial Economics
Deadline: 01/04/16


Doctoral Program News

Young Alumni Balseiro wins George B. Dantzig Dissertation Award

At the 2014 Informs national meeting, Santiago Balseiro was honored for his work in "Competition and Yield Optimization in Ad Exchanges". We congratulate Santiago on his accomplishment.

Read More Here

Ethan Rouen wins Deloitte Doctoral Fellowship in Accounting

The Deloitte Foundation has awarded $25,000 grants to 10 top accounting Ph.D. candidates through the Deloitte Foundation’s annual Doctoral Fellowship program. Given to students who plan to pursue academic careers upon graduation, the award will support the 2015 recipients’ final year of coursework and the subsequent year to complete their doctoral dissertation.

Read More Here

Honigsberg featured in Ideas at Work

The August issue of Ideas at Work features research that doctoral candidate Colleen Honigsberg led in conjunction with Sharon Katz.

Read More about Colleen

Wazlawek featured in Ideas at Work

Abbie Wazlawek's joint research with Professor Daniel Ames is featured in the June 24th, 2014 edition of Ideas at Work

Read More about Abbie

Ethan Rouen featured in Ideas at Work

Ethan Rouen's joint research with Professor Dan Amiram is featured in the May 15th, 2014 edition of Ideas at Work

Read More about Abbie

Rivas Wins Fellowship

The PhD program is proud to congratulate Miguel Duro Rivas, who was awarded the Nasdaq Educational Foundation Doctoral Dissertation Fellowship.

Read More about Miguel

Wong wins Deloitte Fellowship

We are proud to announce that Yu Ting (Forester) Wong is one of the recipients of the 2014 Deloitte Foundation Doctoral Fellowship in Accounting.

Read More About Yu Ting >

The PhD Program Congratulates John Yao

PhD student John Yao was a finalist in the 2013 M&SOM (Manufacturing & Service Operations Management) student paper competition.

Read More About John >

Honigsberg Named Postdoctoral Fellow

The PhD program is proud to congratulate Colleen Honigsberg, who was named the Postdoctoral Fellow in Corporate Governance at the Millstein Center at Columbia Law School in October 2013

Read More about Colleen >


Check Application Status

Students listening to classroom lecture

Once you've submitted your application, you can login and track your status by using the link below.

Check Status