HOUSE MONEY EFFECT AND SNAKE BITE EFFECT ON CHOICE OF UNIT TRUST FUND: A MIXED-METHOD STUDY

Abstract

This mixed-method study investigates the behavioural factors influencing retail investors' choice of unit trust funds in Malaysia, focusing on the Snake Bite Effect (past investment losses) and the House Money Effect (past investment successes). Using Prospect Theory as a framework, the study explores how past experiences with gains and losses shape investors' risk attitudes. Quantitative data were analyzed using descriptive statistics and correlation, revealing that the House Money Effect significantly influences fund choice, while the Snake Bite Effect does not. Qualitative insights, gathered through thematic analysis, reinforced these findings, highlighting that past successes boost confidence and risk-taking, whereas losses lead to cautious decision-making. By employing a triangulation design, this study offers a comprehensive understanding of investors' behaviour, bridging quantitative trends with qualitative depth. The findings have practical implications for investment management and future research into behavioural finance.