Learn More
  • Terrance Odean, Brad Barber, Peter Klein, Hayne Leland, Richard Lyons, David Modest +7 others
  • 1998
I test the disposition effect, the tendency of investors to hold losing investments too long and sell winning investments too soon, by analyzing trading records for 10,000 accounts at a large discount brokerage house. These investors demonstrate a strong preference for realizing winners rather than losers. Their behavior does not appear to be motivated by a(More)
We test and confirm the hypothesis that individual investors are net buyers of attention-grabbing stocks, e.g., stocks in the news, stocks experiencing high abnormal trading volume, and stocks with extreme one-day returns. Attention-driven buying results from the difficulty that investors have searching the thousands of stocks they can potentially buy.(More)
Theoretical models predict that overconn dent investors trade excessively. We test this prediction by partitioning investors on gender. Psychological research demonstrates that, in areas such as nance, men are more overconn dent than women. Thus, theory predicts that men will trade more excessively than women. Using account data for over 35,000 households(More)
We test a catering theory describing how stock market mispricing might influence individual firms' investment decisions. We use discretionary accruals as our proxy for mispricing. We find a positive relation between abnormal investment and discretionary accruals; that abnormal investment is more sensitive to discretionary accruals for firms with higher R&D(More)
People are overconfident. Overconfidence affects financial markets. How depends on who in the market is overconfident and on how information is distributed. This paper examines markets in which price-taking traders, a strategic-trading insider, and risk-averse marketmakers are overconfident. Overconfidence increases expected trading volume, increases market(More)
  • Terrance Odean, Ard Roll, Mark Rubinstein, Paul Ruud, Richard Thaler, Brett Trueman
  • 2000
Trading volume on the world's markets seems high, perhaps higher than can be explained by models of rational markets. For example , the average annual turnover rate on the New York Stock Exchange (NYSE) is currently greater than 75 percent 1 and the daily trading volume of foreign-exchange transactions in all currencies (including forwards, swaps, and spot(More)
Individual investor trading results in systematic and economically large losses. Using a complete trading history of all investors in Taiwan, we document that the aggregate portfolio of individuals suffers an annual performance penalty of 3.8 percentage points. Individual investor losses are equivalent to 2.2% of Taiwan's gross domestic product or 2.8% of(More)
We argue that " narrow framing, " whereby an agent who is offered a new gamble evaluates that gamble in isolation, may be a more important feature of decision-making than previously realized. Our starting point is the evidence that people are often averse to a small, independent gamble, even when the gamble is actuarially favorable. We find that a(More)