Selling Fast and Buying Slow: Heuristics and Trading Performance of Institutional Investors

Klakow Akepanidtaworn, Rick Di Mascio, Alex Imas and Lawrence Schmidt

No 29076, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Are market experts prone to heuristics, and if so, do they transfer across closely related domains—buying and selling? We investigate this question using a unique dataset of institutional investors with portfolios averaging $573 million. A striking finding emerges: while there is clear evidence of skill in buying, selling decisions underperform substantially—even relative to random selling strategies. This holds despite the similarity between the two decisions in frequency, substance and consequences for performance. Evidence suggests that an asymmetric allocation of cognitive resources such as attention can explain the discrepancy: we document a systematic, costly heuristic process when selling but not when buying.

JEL-codes: D91 G02 G12 G4 G41 (search for similar items in EconPapers)
Date: 2021-07
New Economics Papers: this item is included in nep-cwa, nep-isf and nep-mst
Note: AP
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Published as KLAKOW AKEPANIDTAWORN & RICK DI MASCIO & ALEX IMAS & LAWRENCE D.W. SCHMIDT, 2023. "Selling Fast and Buying Slow: Heuristics and Trading Performance of Institutional Investors," The Journal of Finance, vol 78(6), pages 3055-3098.

Downloads: (external link)
http://www.nber.org/papers/w29076.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:29076

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w29076

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().