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Does Reminding Of Behavioural Biases Increase Returns From Financial Trading? A Field Experiment

Author

Listed:
  • Maria De Paola
  • Francesca Gioia
  • Fabio Piluso

    (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)

Abstract

We ran a field experiment to investigate whether nudge policies, consisting in behavioural insight messaging, help to improve performance in financial trading. Our experiment involved students enrolled in a financial trading course in an Italian University who were invited to trade on Borsa Italiana’s virtual platform. Students were randomly assigned to a control group and a treatment group. Treated students received a message reminding them of the existence of behavioural biases in financial trading. We find that treated students significantly improve the performance of their portfolio. This effect is mainly driven by students with a higher than average risk aversion. Several behaviours may explain the increase in performance. We find evidence pointing to a reduction in the home and status quo biases for risk averse nudged participants.

Suggested Citation

  • Maria De Paola & Francesca Gioia & Fabio Piluso, 2017. "Does Reminding Of Behavioural Biases Increase Returns From Financial Trading? A Field Experiment," Working Papers 201705, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    • Handle: RePEc:clb:wpaper:201705
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Le scelte finanziarie migliorano con una spinta gentile
      by Maria De Paola, Francesca Gioia e Fabio Piluso in La Voce on 2017-07-21 13:19:00

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    More about this item

    Keywords

    Financial trading; Behavioural biases; Reminders; Nudges; Home bias; Status quo bias; Risk aversion;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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