Taming the bias zoo

Hongqi Liu, Cameron Peng, Wei A. Xiong and Wei Xiong

Journal of Financial Economics, 2022, vol. 143, issue 2, 716-741

Abstract: The success of behavioral economics has led to a new challenge: many biases offer observationally similar predictions for a targeted financial anomaly. To tame this bias zoo, we combine subjective survey responses with observational data to propose a new approach, one that is 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 trading motives, perceived information advantage and gambling preference dominate other motives, though they are not the most prevalent biases based on survey responses.

Keywords: Bias zoo; Excessive trading; Gambling preference; Perceived information advantage (search for similar items in EconPapers)
JEL-codes: G11 G41 G50 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:143:y:2022:i:2:p:716-741

DOI: 10.1016/j.jfineco.2021.06.001

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