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Learning to wait

Author

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  • Cai, Jinghan
  • He, Jibao
  • Zhai, Weili

Abstract

We use Cai et al. (2017)’s proxy of patience and find out that investors do learn from their prior trading experiences. They become more patient when they participate in more IPOs, and they tend to obtain higher returns. We also document a concave learning curve: inexperienced investors are overall less patient than more experienced ones; however, inexperienced investors’ marginal effect of learning is higher than experienced ones. This learning effect only exists in infrequent traders.

Suggested Citation

  • Cai, Jinghan & He, Jibao & Zhai, Weili, 2017. "Learning to wait," Finance Research Letters, Elsevier, vol. 23(C), pages 196-201.
  • Handle: RePEc:eee:finlet:v:23:y:2017:i:c:p:196-201
    DOI: 10.1016/j.frl.2017.07.011
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    References listed on IDEAS

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    1. Yao-Min Chiang & David Hirshleifer & Yiming Qian & Ann E. Sherman, 2011. "Do Investors Learn from Experience? Evidence from Frequent IPO Investors," Review of Financial Studies, Society for Financial Studies, vol. 24(5), pages 1560-1589.
    2. Amit Seru & Tyler Shumway & Noah Stoffman, 2010. "Learning by Trading," Review of Financial Studies, Society for Financial Studies, vol. 23(2), pages 705-739, February.
    3. Nicolosi, Gina & Peng, Liang & Zhu, Ning, 2009. "Do individual investors learn from their trading experience?," Journal of Financial Markets, Elsevier, vol. 12(2), pages 317-336, May.
    4. Mark Grinblatt & Matti Keloharju & Juhani Linnainmaa, 2011. "IQ and Stock Market Participation," Journal of Finance, American Finance Association, vol. 66(6), pages 2121-2164, December.
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