Smoking hot portfolios? Trading behavior, investment biases, and self-control failure

Charline Uhr; Steffen Meyer; Andreas Hackethal

doi:10.1016/j.jempfin.2021.05.006

Smoking hot portfolios? Trading behavior, investment biases, and self-control failure

Charline Uhr, Steffen Meyer, Andreas Hackethal

Publikation: Bidrag til tidsskrift/Konferencebidrag i tidsskrift /Bidrag til avis › Tidsskriftartikel › Forskning › peer review

8 Citationer (Scopus)

Abstract

Self-control is a personality trait that explains undersaving and nonparticipation decisions. We show that self-control failure also affects trading behavior among individuals on capital markets. We use smoking as the most socially accepted example of self-control failure among 13,644 German brokerage clients and compare the trading behavior of 3,553 smokers and 10,091 nonsmokers. Smokers are associated with a higher portfolio turnover unexplained by financial sophistication or wealth effects. Self-control failure also exacerbates overconfidence, social contagion, sensation seeking, and attention grabbing. Overall, self-control failure is costly because it increases the gap between gross and net returns of smokers relative to nonsmokers.

Originalsprog	Engelsk
Tidsskrift	Journal of Empirical Finance
Vol/bind	63
Sider (fra-til)	73-95
Antal sider	23
ISSN	0927-5398
DOI	https://doi.org/10.1016/j.jempfin.2021.05.006
Status	Udgivet - sep. 2021
Udgivet eksternt	Ja

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10.1016/j.jempfin.2021.05.006

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Link to publication in Scopus

SFS Cavalcade North America 2020
Meyer, S. (Taler) & Uhr, C. (Taler)
25 maj 2020 → 28 maj 2020
Aktivitet: Deltagelse i eller arrangement af en begivenhed - typer › Deltagelse i eller organisering af konference
2019 Boulder Summer Conference on Consumer Financial Decision Making
Meyer, S. (Taler) & Uhr, C. (Taler)
19 maj 2019 → 21 maj 2019
Aktivitet: Deltagelse i eller arrangement af en begivenhed - typer › Deltagelse i eller organisering af konference

Citationsformater

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title = "Smoking hot portfolios? Trading behavior, investment biases, and self-control failure",

abstract = "Self-control is a personality trait that explains undersaving and nonparticipation decisions. We show that self-control failure also affects trading behavior among individuals on capital markets. We use smoking as the most socially accepted example of self-control failure among 13,644 German brokerage clients and compare the trading behavior of 3,553 smokers and 10,091 nonsmokers. Smokers are associated with a higher portfolio turnover unexplained by financial sophistication or wealth effects. Self-control failure also exacerbates overconfidence, social contagion, sensation seeking, and attention grabbing. Overall, self-control failure is costly because it increases the gap between gross and net returns of smokers relative to nonsmokers.",

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T1 - Smoking hot portfolios? Trading behavior, investment biases, and self-control failure

AU - Uhr, Charline

AU - Meyer, Steffen

AU - Hackethal, Andreas

PY - 2021/9

Y1 - 2021/9

N2 - Self-control is a personality trait that explains undersaving and nonparticipation decisions. We show that self-control failure also affects trading behavior among individuals on capital markets. We use smoking as the most socially accepted example of self-control failure among 13,644 German brokerage clients and compare the trading behavior of 3,553 smokers and 10,091 nonsmokers. Smokers are associated with a higher portfolio turnover unexplained by financial sophistication or wealth effects. Self-control failure also exacerbates overconfidence, social contagion, sensation seeking, and attention grabbing. Overall, self-control failure is costly because it increases the gap between gross and net returns of smokers relative to nonsmokers.

AB - Self-control is a personality trait that explains undersaving and nonparticipation decisions. We show that self-control failure also affects trading behavior among individuals on capital markets. We use smoking as the most socially accepted example of self-control failure among 13,644 German brokerage clients and compare the trading behavior of 3,553 smokers and 10,091 nonsmokers. Smokers are associated with a higher portfolio turnover unexplained by financial sophistication or wealth effects. Self-control failure also exacerbates overconfidence, social contagion, sensation seeking, and attention grabbing. Overall, self-control failure is costly because it increases the gap between gross and net returns of smokers relative to nonsmokers.

KW - Individual investor

KW - Investment biases

KW - Overtrading

KW - Self-control

KW - Trading behavior

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DO - 10.1016/j.jempfin.2021.05.006

M3 - Journal article

AN - SCOPUS:85107850142

SN - 0927-5398

VL - 63

SP - 73

EP - 95

JO - Journal of Empirical Finance

JF - Journal of Empirical Finance

ER -

Smoking hot portfolios? Trading behavior, investment biases, and self-control failure

Abstract

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Aktiviteter

SFS Cavalcade North America 2020

2019 Boulder Summer Conference on Consumer Financial Decision Making

Citationsformater