Vanity in teams
Abstract
We hypothesize that vanity amplifies realization utility in teams; admitting mistakes is particularly painful when mistakes have to be admitted to self and colleagues. Consistent with the Vanity hypothesis, U.S. stock funds run by teams hold on to losers when losers were initiated by a subset of the team (to avoid admitting a mistake to their non-initiating colleagues), when initiators of loser positions are more experienced (to avoid losing authority by admitting mistakes to junior colleagues), and when all colleagues agree that a position is a loser. Vanity is costly – losers held underperform by a risk-adjusted 1% annually.
Fields of Study & Subjects
Corporate Finance and Governance
Experimental Behavioral Economics Studies
Economic Policies and Impacts
Publication details
- Journal / source
- Journal of Banking & Finance
- Volume
- 184
- Pages
- 107637–107637
- Publication date
- 9 January 2026
- Language
- EN