SIFR Research Report Series, Institute for Financial Research
Is Online Trading Gambling with Peanuts?
Abstract: If individuals derive a small utility from gambling, we
should observe high turnover in stock portfolios that are of only marginal
importance to them. By the use of detailed individual financial data, as
weIl as trades from a Swedish online broker, we measure the frequency and
cost of online trading in the cross-section and reject this hypothesis.
Investors who have online portfolios that constitute a large share of risky
assets are more likely to trade, trade more aggressively when they do
trade, have lower trading performance, and less wealth. Trading losses are
therefore mainly carried by those who can afford to carry them the
Keywords: Investor behavior; gambling; online trading; overconfidence; (follow links to similar papers)
JEL-Codes: C24; D14; G11; (follow links to similar papers)
38 pages, May 15, 2008
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