by selling winners. Dacey and Zielonka showed that the greater the level of stock prices volatility, the more prone the investor was to sell a loser, contrary to the disposition effect. This result explains the panic selling of stocks during a market collapse. Shefrin and Statman study The effect was identified and named by Hersh Shefrin and Meir Statman in 1985. In their study, Shefrin and Statman noted that individuals do not like causing losses any more than they like making benefits, and individuals are able to gamble on losses. Consequently, investors will be energetic to sell stocks that have risen in value but holding onto stocks that have decreased value. The researchers coined the term "disposition effect" to describe this tendency of holding on to losing stocks too long and to sell off well-performing stocks too readily. Shefrin colloquially described this as a "predisposition toward get-evenitis." John R. Nofsinger has called this sort of investment behavior as a product of the desire to avoid regret and seek pride. Prospect theory Researchers have traced the cause of the disposition effect to so-called "prospect theory", which was first identified and named by Daniel Kahneman and Amos Tversky in 1979. Kahneman and Tversky stated that losses generate more emotional feelings which affect individual than the effects of an equivalent amount of gains. and that people consequently base their decisions not on perceived losses but on perceived gains. What this means is that, if presented with two equal choices, one described in terms of possible gains and the other described in terms of possible losses, they would opt for the former choice, even though both would yield the same economic end result. For example, even though the net result of receiving $50 would be the same as the net result of gaining $100 and then losing $50, people would tend to take a more favorable view of the former than of the latter scenario. In Kahneman and Tversky's study, participants were presented with two situations. In the first, they had $1,000 and had to select one of two choices. Under Choice A, they would have a 50% chance of gaining $1,000, and a 50% chance of gaining $0; under Choice B, they would have a 100% chance of gaining $500. In the second situation, they had $2,000 and had to select either Choice A (a 50% chance of losing $1,000, and 50% of