We use transaction-level data of portfolio trades and holdings linked to checking, savings, and settlement account transactions and balances to explore how individuals respond to realized capital gains and losses. We exploit plausibly exogenous sales due to mutual fund liquidations for...

We use transaction-level data of portfolio trades and holdings linked to checking, savings, and settlement account transactions and balances to explore how individuals respond to realized capital gains and losses. We exploit plausibly exogenous sales due to mutual fund liquidations for...

Psychology considers self-control failure, i.e., the inability to resist certain behaviors and impulses when seeking to achieve future goals as a major human pathology. The finance literature models and applies self-control failure to explain time-inconsistent behavior such as under-saving and...

We analyze how individuals reinvest realized capital gains and losses exploiting plausibly exogenous sales due to mutual fund liquidations. Individuals reinvest 83% if a forced sale results in a gain relative to the initial investment; however, they reinvest only 40% in the event of a loss. This...