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

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  • 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.

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Bibliographic Info

Paper provided by Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg in its series Working Papers of LaRGE Research Center with number 2010-06.

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Date of creation: 2010
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Handle: RePEc:lar:wpaper:2010-06

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