Is Online Trading Gambling with Peanuts?

Anders Anderson ()
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Anders Anderson: Stockholm University, Postal: Department of Economics, 106 91 Stockholm, Sweden

No 62, SIFR Research Report Series from Institute for Financial Research

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 least.

Keywords: Investor behavior; gambling; online trading; overconfidence (search for similar items in EconPapers)
JEL-codes: C24 D14 G11 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2008-05-15
New Economics Papers: this item is included in nep-cbe and nep-soc
References: Add references at CitEc
Citations: View citations in EconPapers (4)

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