Karlsson, Loewenstein and Seppi (2009) found that, following market downswings, investors are less likely to login to monitor their retirement portfolios. They concluded that, rather like (apocryphal) ostriches sticking their heads in the sand, investors avoid unpleasant information by reducing...

In this study, we examine the differences in the factors perceived to be significant in the security selection process between novice and experienced investors. We apply the direct inquiry approach to two distinct groups: One group is composed of students enrolled in traditional face-to-face...

In this paper we study the repurchasing behavior of individual investors and identify several characteristics (stock- and investor-specific) that affect the preference for repurchasing stocks previously owned. Using a unique database of 5,128 individual investors trading from August 1st, 2003 to...

When determining a stock to buy, Strahilevitz et al. (2011) demonstrate that individual investors often repurchase a stock previously traded for a profit as a learning process. When evaluating a decision, people use the most available information that comes to mind. We posit that the most...

This paper provides causal evidence that leverage constraints can reduce the underperformance of individual investors. In accordance with Dodd-Frank, the CFTC was given regulatory authority over the retail market for foreign exchange and capped the maximum permissible leverage available to U.S....

We find that individual investors who use technical analysis and trade options frequently make poor portfolio decisions, resulting in dramatically lower returns than other investors. The data on which this claim is based consists of transaction records and matched survey responses of a sample of...

In this paper we investigate the influence of coupon structure on the financial behavior of Individual Investors in the fixed-income market. Examining circa 26 million decisions on 204 standard putable bonds with different coupon offerings our major findings are: (i) Products with a flat coupon...

The characterization of financial returns depends heavily on probabilistic behavior, which can be ill-fitted, thus leading to inappropriate economic decisions concerning asset pricing, portfolio allocation and/or the measurement of market risk. In this paper, we propose a test to determine the...

Self-attribution bias is a long-standing concept in psychology research and refers to individuals’ tendency to attribute successes to personal skills and failures to factors beyond their control. Recently, this bias is also being studied in household finance research and is considered to...

We analyze investors’ trading behavior, particularly their coping with fundamental shocks in asset value, depending on individual differences in the sensitivity of two basic neurophysiological systems—the Behavioral Approach System (BAS), the ‘driving force’ of human behavior, and the...