Boys will still be boys: Gender differences in trading activity are not due to differences in (over)confidence

Cueva, Carlos; Iturbe-Ormaetxe, Iñigo; Ponti, Giovanni; Tomás, Josefa

doi:10.1016/j.jebo.2019.02.027

Cited by 46 publications

(6 citation statements)

References 64 publications

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“…There is no evidence of differences in gender and trading activity (Biais et al, 2005;Cueva et al, 2019;Deaves et al, 2009;Fellner-Röhling & Krügel, 2014). These findings are inconsistent with those of Barber and Odean (2001) and Kumar and Goyal (2016).…”

Section: Impacts Empirical Resultsmentioning

confidence: 69%

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Behavioral Biases and their Influence on Investment Decision-Making: A Systematic Literature Review and Future Research Agenda

Paúl¹,

Natarajan²

2023

J. of Law and Sust. Develop.

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Objective: This study aims to systematically review the existing literature published over the past 42 years on behavioral biases in investment decision-making. Therefore, the current study concentrates on two biases: overconfidence and herding bias of individual and institutional investors. Theoretical framework: Kahneman and Tversky (1979) formulated prospect theory and concluded that investors make decisions based on possible gains and losses, rather than on final outcomes. Therefore, this study used this theory to understand the influence of behavioral biases on investment decisions. Methods: This study used a systematic literature review (SLR) and 109 selected articles for review published between 1980 and 2022. Most importantly, this study conducted a content analysis of behavioral biases in investment decision-making. Result and Conclusion: The volume of research on behavioral bias has increased over the past two decades. The existing literature shows limited research on institutional investors’ overconfidence bias, limited studies on individual herding behavior, ineffective direct measures of overconfidence, the majority of research showed that institutional investors are more inclined to herd than individual investors, and the maximum number of studies showed that individual investors are more susceptible to overconfidence bias than institutional investors. Implications of the research: This study highlights the influence of behavioral biases in investment decision-making and suggests a future research agenda for future researchers, as well as helpful to investment advisors enabling them to manage biases and select purposeful stocks for their clientele. Originality/value: This study delineates the behavioral biases of individual and institutional investors. This first study encompasses relevant studies conducted between 1980 and 2022 and lucidly summarizes the behavioral biases, including the ‘overconfidence’ and ‘herding’ tendencies of these different kinds of investors.

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Section: Impacts Empirical Resultsmentioning

confidence: 69%

“…Variable asymmetric information has been studied previously (Biais et al, 2005;Cueva et al, 2019;Deaves et al, 2009;Fellner-Röhling & Krügel, 2014). Interestingly, Yang and…”

Section: Impacts Empirical Resultsmentioning

confidence: 99%

Behavioral Biases and their Influence on Investment Decision-Making: A Systematic Literature Review and Future Research Agenda

Paúl¹,

Natarajan²

2023

J. of Law and Sust. Develop.

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“…Such biases often begin at an early age (Rudeloff et al, 2019) and tend to link women to the practice of savings while excluding them from economic discussions (Yu et al, 2015). This is in contrast to the way in which men are taught from a young age to trust in their economic abilities and are actively included in financial discussions (Al-Bahrani et al, 2020;Bannier & Schwarz, 2018;Cueva et al, 2019;Lind et al, 2020). There is substantial evidence in this regard that shows how the processes of financial literacy are differentiated by gender (Fonseca et al, 2012;Lulup Tripalupi et al, 2020).…”

Section: The Financial Inclusion Of Women and The Financial Education...mentioning

confidence: 99%

Women and Finances: Exploring the Place of Women in the Chilean Financial Education Programs

Pérez-Roa

Allendes

Fontecilla

2022

Affilia

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This article explores the suppositions that financial education programs in Chile have on the financial behavior of low-income women. For this purpose, through a documentary analysis of the National Strategy for Financial Education (ENEF) and a series of interviews with different actors involved in the financial education program, we seek to explain how the intervention considers the role of women in the financial space, exploring the assumptions that guide the methodologies deployed in the intervention. Our results are divided in two: first, we explore the assumptions of the ENEF and the reasons that make women its priority audience; emphasizing the diagnosis, the assigned roles and the expected behavioral changes. Second, we explore the intervention methodology to account for how, through the teaching of savings and planning skills, women are expected to improve their financial skills and those of their household. We discuss how gender roles persist in these intervention spaces and the importance of incorporating feminist perspectives to think about emancipatory interventions.

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“…Instead, we included the selfassessed general "willingness to take risks" measure of risk and used this "erratic" measure as a control in the regression. For simplicity and consistency with the other psychological measures, we also only included the selfassessed general measure of confidence and not the group ranking forecasts, although results do not change if the latter measure is used instead (these forecasts are reported and used in Cueva et al 2019).…”

Section: Regression Analysismentioning

confidence: 99%

“…A prominent explanation of why individual investors actively trade in financial markets with significant transaction costs is that they are overconfident(Barber and Odean, 2000;2001).5 The analysis of (gender effects in) trade volume for this experiment is discussed in detail inCueva et al (2019).…”

mentioning

confidence: 99%

An experimental analysis of the disposition effect: Who and when?

Cueva

Iturbe-Ormaetxe

Ponti

et al. 2019

Journal of Behavioral and Experimental Economics

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The disposition effect (DE) is a common bias by which investors tend to sell winning assets too soon and hold losing assets too long. We complement the existing evidence in three directions. First, we check whether the DE is robust to realistic features such as transaction costs and competitive payment schemes. Second, by using a gender-balanced design, we check for gender differences. Third, we search for psychological correlates of the DE. We find that the DE is positive and significant in all our treatments. We do not find significant differences across treatments, although transaction costs significantly reduce the propensity to sell both winners and losers. We find somewhat larger DE in women, but this effect is only significant in the second half of the experiment. On the other hand, women are more reluctant to sell losing assets throughout the experiment. Finally, we find that the most significant psychological predictors of the DE are difficulty recognizing one's mistakes and optimism. Subjects scoring high in these traits are less likely to sell at a loss and therefore exhibit a larger DE. Our results provide further suggestive evidence of cognitive dissonance as an important determinant of the DE.

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Boys will still be boys: Gender differences in trading activity are not due to differences in (over)confidence

Cited by 46 publications

References 64 publications

Behavioral Biases and their Influence on Investment Decision-Making: A Systematic Literature Review and Future Research Agenda

Behavioral Biases and their Influence on Investment Decision-Making: A Systematic Literature Review and Future Research Agenda

Women and Finances: Exploring the Place of Women in the Chilean Financial Education Programs

An experimental analysis of the disposition effect: Who and when?

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