O'Reilly logo

Handbook of the Economics of Finance by Rene M. Stulz, Milton Harris, George M. Constantinides

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Chapter 22

The Behavior of Individual Investors *

Brad M. Barbera and Terrance Odeanb

aGraduate School of Management, University of California, Davis, Davis, CA 95616, USA. Tel.:+1 (530) 752 0512

bHaas School of Business, University of California, Berkeley, Berkeley, CA 94720, USA. Tel.:+1 (510) 642 6767, bmbarber@ucdavis.edu http://www.gsm.ucdavis.edu/~bmbarber

Abstract

We provide an overview of research on the stock trading behavior of individual investors. This research documents that individual investors (1) underperform standard benchmarks (e.g. a low-cost index fund), (2) sell winning investments while holding losing investments (the “disposition effect”), (3) are heavily influenced by limited attention and past return performance in their ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required