Taming the Bias Zoo

Hongqi Liu, Cameron Peng, Wei A. Xiong and Wei Xiong
Authors registered in the RePEc Author Service: Wei Xiong

No 26911, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The success of the behavioral economics literature has led to a new challenge—a large number of behavioral biases offering observationally similar predictions for a targeted anomaly in financial markets. To tame the bias zoo, we propose a new approach of combining subjective survey responses with observational data; this approach has the advantage of being robust to question-specific biases introduced through surveys. We illustrate this approach by administering a nationwide survey of Chinese retail investors to elicit their trading motives. In cross-sectional regressions of respondents’ actual turnover on survey-based measures of trading motives, perceived information advantage and gambling preference dominate other motives, even though they are not the most prevalent biases simply based on survey responses.

JEL-codes: G02 G41 G53 (search for similar items in EconPapers)
Date: 2020-03
Note: AP
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Hongqi Liu & Cameron Peng & Wei A. Xiong & Wei Xiong, 2021. "Taming the bias zoo," Journal of Financial Economics, .

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