Information Management against Excessive Stock Trading: More or Less? Or Both?

Moritz Mosenhauer

VfS Annual Conference 2020 (Virtual Conference): Gender Economics from Verein für Socialpolitik / German Economic Association

Abstract: This paper investigates tools to counter excessive stock trading and increase profits for private households participating in the stock market. Creating a stylised hold or trade-scenario in a computer laboratory experiment, I find that by solely changing the information the participants receive, trading activity can be reduced by roughly 30%, increasing trading profits by more than 0.55 percentage points on monthly net returns. In particular, I consider two information treatments. First, I provide the participants with additional information by giving detailed feedback on their actions and outcomes at every turn. Second, when considering whether to hold a given stock or trade it for another one, I restrict participants' information on the recent performance of their allocated stock. Both interventions lead to significant changes in behaviour. Additionally, the 2 × 2 experimental design reveals that the effects stack.

JEL-codes: G41 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-exp and nep-mst
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc20:224549

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