Social trading platforms allow investors to interact with each other. Thispaper studies the impact of peer attention on social trading platforms oninvestors disposition effect. Using a difference-in-differences approach, Ifind a significant increase in the disposition effect when investors receiveattention from their peers. This disposition effect increases as the numberof other investors distributing likes to one anothers trading decisionsincreases. This effect is driven both by holding on to losing positionslonger and by closing winning positions faster. This finding may beexplained by social facilitation theory. In the presence of others, investorswant to achieve superior outcomes and limit their losses.
