How biased is the behavior of the individual investor in warrants?

Detalhes bibliográficos
Autor(a) principal: Abreu, Margarida
Data de Publicação: 2017
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/10400.5/14179
Resumo: Based on the actual trading behavior of individual investors in the Portuguese financial market during almost ten years this paper examines the socio‐demographic characteristics of retail investors in warrants, and discusses the hypothesis that some behavioral biases do have an impact on the investors’ predisposition to invest and trade in warrants, a complex financial instrument. One finds that there is a profile of investors in warrants: younger and less educated men are more likely to invest in warrants and that overconfident, disposition‐prone and investors exhibiting a gambling attitude are more likely to invest and trade in warrants. Secondly, the gambling motive seems to be a distinguishing characteristic of investors in warrants. In other words, when investors are driven to trade in financial markets for pleasure/fun they tend to trade complex products more and to trade simple and easier to understand financial instruments less. Finally, the higher the intensity of trading the more relevant are the disposition and the gambler’s biases.
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spelling How biased is the behavior of the individual investor in warrants?WarrantsOverconfidenceDisposition EffectGambling EffectIndividual Investor BehaviorBased on the actual trading behavior of individual investors in the Portuguese financial market during almost ten years this paper examines the socio‐demographic characteristics of retail investors in warrants, and discusses the hypothesis that some behavioral biases do have an impact on the investors’ predisposition to invest and trade in warrants, a complex financial instrument. One finds that there is a profile of investors in warrants: younger and less educated men are more likely to invest in warrants and that overconfident, disposition‐prone and investors exhibiting a gambling attitude are more likely to invest and trade in warrants. Secondly, the gambling motive seems to be a distinguishing characteristic of investors in warrants. In other words, when investors are driven to trade in financial markets for pleasure/fun they tend to trade complex products more and to trade simple and easier to understand financial instruments less. Finally, the higher the intensity of trading the more relevant are the disposition and the gambler’s biases.ISEG - Departamento de EconomiaRepositório da Universidade de LisboaAbreu, Margarida2017-10-20T14:45:09Z20172017-01-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.5/14179engAbreu, Margarida .2017. "How biased is the behavior of the individual investor in warrants?". Instituto Superior de Economia e Gestão. DE Working papers nº 18-2017/DE/UECE2183-1815info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-03-06T14:44:14Zoai:www.repository.utl.pt:10400.5/14179Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T17:00:03.560311Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse
dc.title.none.fl_str_mv How biased is the behavior of the individual investor in warrants?
title How biased is the behavior of the individual investor in warrants?
spellingShingle How biased is the behavior of the individual investor in warrants?
Abreu, Margarida
Warrants
Overconfidence
Disposition Effect
Gambling Effect
Individual Investor Behavior
title_short How biased is the behavior of the individual investor in warrants?
title_full How biased is the behavior of the individual investor in warrants?
title_fullStr How biased is the behavior of the individual investor in warrants?
title_full_unstemmed How biased is the behavior of the individual investor in warrants?
title_sort How biased is the behavior of the individual investor in warrants?
author Abreu, Margarida
author_facet Abreu, Margarida
author_role author
dc.contributor.none.fl_str_mv Repositório da Universidade de Lisboa
dc.contributor.author.fl_str_mv Abreu, Margarida
dc.subject.por.fl_str_mv Warrants
Overconfidence
Disposition Effect
Gambling Effect
Individual Investor Behavior
topic Warrants
Overconfidence
Disposition Effect
Gambling Effect
Individual Investor Behavior
description Based on the actual trading behavior of individual investors in the Portuguese financial market during almost ten years this paper examines the socio‐demographic characteristics of retail investors in warrants, and discusses the hypothesis that some behavioral biases do have an impact on the investors’ predisposition to invest and trade in warrants, a complex financial instrument. One finds that there is a profile of investors in warrants: younger and less educated men are more likely to invest in warrants and that overconfident, disposition‐prone and investors exhibiting a gambling attitude are more likely to invest and trade in warrants. Secondly, the gambling motive seems to be a distinguishing characteristic of investors in warrants. In other words, when investors are driven to trade in financial markets for pleasure/fun they tend to trade complex products more and to trade simple and easier to understand financial instruments less. Finally, the higher the intensity of trading the more relevant are the disposition and the gambler’s biases.
publishDate 2017
dc.date.none.fl_str_mv 2017-10-20T14:45:09Z
2017
2017-01-01T00:00:00Z
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://hdl.handle.net/10400.5/14179
url http://hdl.handle.net/10400.5/14179
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv Abreu, Margarida .2017. "How biased is the behavior of the individual investor in warrants?". Instituto Superior de Economia e Gestão. DE Working papers nº 18-2017/DE/UECE
2183-1815
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
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dc.publisher.none.fl_str_mv ISEG - Departamento de Economia
publisher.none.fl_str_mv ISEG - Departamento de Economia
dc.source.none.fl_str_mv reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
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