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What Makes a Good Trader? On the Role of Quant Skills, Behavioral Biases and Intuition on Trader Performance

Brice Corgnet (), Mark DeSantis and David Porter
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Mark DeSantis: Economic Science Institute & Argyros School of Business and Economics, Chapman University

Working Papers from Chapman University, Economic Science Institute

Abstract: We study the determinants of individual trader performance by conducting a comprehensive analysis of a broad range of variables that have been studied separately in different strands of the literature (financial literacy, cognitive skills, behavioral biases and the theory of mind). We utilize an experimental trading environment that allows us to control information flows into the market and measure a large set of individual characteristics. We show that behavioral biases (such as overconfidence and the failure to understand random sampling) significantly explain trader performance whereas standard cognitive and theory of mind skills only have a marginal effect. These results support the recent effort to incorporate Behavioral Finance research findings into the financial training curriculum.

Keywords: Experimental asset markets; behavioral finance; cognitive ability; financial education (search for similar items in EconPapers)
JEL-codes: C92 G02 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-exp and nep-hrm
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