What Makes a Good Trader? On the Role of Intuition and Reflection on Trader Performance

Brice Corgnet, Mark Desantis and David Porter

Journal of Finance, 2018, vol. 73, issue 3, 1113-1137

Abstract: Using laboratory experiments, we provide evidence on three factors influencing trader performance: fluid intelligence, cognitive reflection, and theory of mind (ToM). Fluid intelligence provides traders with computational skills necessary to draw a statistical inference. Cognitive reflection helps traders avoid behavioral biases and thereby extract signals from market orders and update their prior beliefs accordingly. ToM describes the degree to which traders correctly assess the informational content of orders. We show that cognitive reflection and ToM are complementary because traders benefit from understanding signals’ quality only if they are capable of processing these signals.

Date: 2018
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Citations: View citations in EconPapers (65)

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https://doi.org/10.1111/jofi.12619

Related works:
Working Paper: What Makes a Good Trader? On the Role of Intuition and Reflection on Trader Performance (2018)
Working Paper: What Makes a Good Trader? On the Role of Intuition and Reflection on Trader Performance (2016)
Working Paper: What Makes a Good Trader? On the Role of Intuition and Reflection on Trader Performance (2016)
Working Paper: What Makes a Good Trader? On the Role of Intuition and Reflection on Trader Performance (2016)
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