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Copy trading

Jose Apesteguia (), Jörg Oechssler and Simon Weidenholzer

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: Copy trading allows traders in social networks to receive information on the success of other agents in financial markets and to directly copy their trades. Internet platforms like eToro, ZuluTrade, and Tradeo have attracted millions of users in recent years. The present paper studies the implications of copy trading for the risk taking of investors. Implementing a novel experimental financial asset market, we show that providing information on the success of others leads to a significant increase in risk taking of subjects. This increase in risk taking is even larger when subjects are provided with the option to directly copy others. We conclude that copy trading leads to excessive risk taking.

Keywords: Copy trading, financial markets, social networks, imitation; experiment. (search for similar items in EconPapers)
JEL-codes: C91 D81 G12 G20 G41 (search for similar items in EconPapers)
Date: 2018-07, Revised 2019-09
New Economics Papers: this item is included in nep-exp and nep-mst
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Journal Article: Copy Trading (2020) Downloads
Working Paper: Copy Trading (2018) Downloads
Working Paper: Copy Trading (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1615

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