Finance Research Seminar – Professor Darren Duxbury
Title: Decomposing Unrealized Returns into Adapted and Unadapted Components Using Reference Points
Date: 26 November 2025
Time: 13:00-15:00
Venue: FDC.2.16
If you would like to attend, please register using the following link:
Decomposing Unrealized Returns into Adapted and Unadapted Components Using Reference Points.
Speaker: Professor Darren Duxbury
Professor Darren Duxbury: Professor Duxbury is an international expert in the areas of experimental and behavioral finance. He publishes in world-leading, internationally excellent, academic journals, including Management Science, Organizational Behavior and Human Decision Processes, British Journal of Management, and Journal of Banking and Finance, along with Journal of Empirical Finance, European Journal of Finance, Journal of International Financial Markets Institutions and Money, International Review of Financial Analysis, Review of Quantitative Finance and Accounting, Journal of Economic Behavior and Organization, Economics Letters, Accounting and Business Research and British Accounting Review. His interdisciplinary work is published in international journals across various disciplines, including Risk Analysis, Journal of Economic Psychology, Legal Studies and Sustainability. He is the author of two invited review papers in the Review of Behavioral Finance, a research monograph on repeated financial decision making and presents regularly at international conferences.
Professor Duxbury’s research is recognised internationally (he was awarded a Citation of Excellence by Emerald Management Reviews for one of the top 50 papers worldwide in 2008) and has informed research by the Federal Reserve Bank of New York and Whitehouse discussions. He is named in the House of Lords inquiry into the use of behaviour change interventions as a means of achieving government policy goals (Behaviour Change, Evidence Session No. 3, 16-11-2010) in the context of behaviour change expertise in the UK. Professor Duxbury’s expertise has been sought by the Department for Work and Pensions (DWP) in relation to personal accounts and auto-enrolment and by the Personal Accounts Delivery Authority (PADA) and the National Employment Savings Trust (NEST) in relation to attitudes to loss in pensions.
Abstract:
Previous research shows that realized and unrealized outcomes influence subsequent risk-taking behavior, albeit in opposite ways. We further decompose unrealized outcomes into adapted and unadapted components, which have distinct implications for risk-taking. Adapted returns are internalized as individuals adjust their reference point, while unadapted returns remain externalized. Our empirical evidence shows that adapted and unadapted returns exert opposing influences on future stock returns. Notably, the highest-performing stocks have a distant past return that is low (reflecting an adapted loss) paired with a recent past return that is high (reflecting an unadapted gain).