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Trading activity and Overconfidence: First Evidence from a large European Database

Author

Listed:
  • Shaneera Boolell-Gunesh

    (LaRGE Research Center, Université de Strasbourg)

  • Maxime Merli

    (LaRGE Research Center, Université de Strasbourg)

Abstract

We investigate the presence of overconfidence for 43 958 individual investors using a large brokerage account database between 1999 and 2006. We employ three methodologies to gauge overconfidence and our main results show that independently of the methodology considered, individual investors are subject to overconfidence and consequently trade too frequently. Securities investors are buying are systematically underperforming those they are selling on follow-up periods; investors are clearly not making profitable trades.

Suggested Citation

  • Shaneera Boolell-Gunesh & Maxime Merli, 2010. "Trading activity and Overconfidence: First Evidence from a large European Database," Working Papers of LaRGE Research Center 2010-06, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    • Handle: RePEc:lar:wpaper:2010-06
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    File URL: http://ifs.u-strasbg.fr/large/publications/2010/2010-06.pdf
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    Cited by:

    1. Bekiros, Stelios & Jlassi, Mouna & Naoui, Kamel & Uddin, Gazi Salah, 2018. "Risk perception in financial markets: On the flip side," International Review of Financial Analysis, Elsevier, vol. 57(C), pages 184-206.

    More about this item

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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