Traders Setting Higher Goals More Satisfied?

What Are Your Trading Goals?

Authors Cecile K. Cho (University of California, Riverside) and Venkataramani Johar (Columbia University) compared people who set conservative goals with people who set ambitious goals. They focused on situations in which goals were achieved, and measured the level of satisfaction with the achieved goals.
In one experiment, the researchers asked participants to set a target goal before they collected information on several stocks and picked three. They were then provided with the performance of the three stocks they picked. "When participants find out that their investment goals have been met, those who set a conservative goal are less satisfied than those who set ambitious goals," the authors write. The same was true with a subsequent experiment with puzzles.
"Satisfaction is often driven by comparing the level of performance to a different standard than one's initial goal," the authors write. They found that when participants were reminded of the goals they had set, they reached similar levels of satisfaction, regardless of whether the performance was low or high.