NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Wei A. Xiong

Shenzhen Stock Exchange
2012 Shennan Blvd.
Shenzhen
China

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Shenzhen Stock Exchange

NBER Working Papers and Publications

March 2020Resolving the Excessive Trading Puzzle: An Integrated Approach Based on Surveys and Transactions
with Hongqi Liu, Cameron Peng, Wei Xiong: w26911
The behavioral finance literature has provided over a dozen explanations for the so-called excessive trading puzzle – retail investors trade a lot even though more trading hurts their performance. It is difficult to use transaction data to differentiate these explanations as they share similar predictions by design. To confront this challenge, we design and administer a nation-wide survey among retail investors to elicit their responses to an exhaustive list of trading motives. By merging survey responses with account-level transaction data, we validate survey responses with actual trading behaviors and compare the power of survey-based and transaction-based measures of trading motives. A horse race among survey-based trading motives suggests that overconfidence in having information advan...
 
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