Debiasing Recency: Evidence from Individual Investor Stock Sales

Vladimir Kotomin & Abhishek Varma

Journal of Behavioral Finance2025https://doi.org/10.1080/15427560.2025.2485461article
AJG 2ABDC A
Weight
0.37

Abstract

In the first large-sample study of recency bias mitigation, we show that individual investors dispose of relatively longer-held stocks in December tax-loss sales compared to other months. We argue that before engaging in December tax-loss sales, investors review all or most of their losing positions instead of focusing on the most recently acquired stocks. Thus, reviewing relevant information mitigates recency bias in a large, diverse sample of investors. This behavior is consistent across investor, stock, and portfolio characteristics; it is found even in accounts with only long-term capital losses.

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https://doi.org/https://doi.org/10.1080/15427560.2025.2485461

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@article{vladimir2025,
  title        = {{Debiasing Recency: Evidence from Individual Investor Stock Sales}},
  author       = {Vladimir Kotomin & Abhishek Varma},
  journal      = {Journal of Behavioral Finance},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1080/15427560.2025.2485461},
}

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.