Taming the bias zoo

Hongqi Liu, Cameron Peng, Xiong Wei and Xiong Wei

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2022-02-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Published in Journal of Financial Economics, 1, February, 2022, 143(2), pp. 716 - 741. ISSN: 0304-405X

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:109301

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