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Taming the bias zoo

Liu, Hongqi, Peng, Cameron ORCID: 0009-0008-1297-8686, Wei, Xiong and Wei, Xiong (2022) Taming the bias zoo. Journal of Financial Economics, 143 (2). 716 - 741. ISSN 0304-405X

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Identification Number: 10.1016/j.jfineco.2021.06.001

Abstract

The success of behavioral economics has led to a new challenge: many biases offer observationally similar predictions for a targeted financial anomaly. To tame this bias zoo, we combine subjective survey responses with observational data to propose a new approach, one that is robust to question-specific biases introduced through surveys. We illustrate this approach by administering a nationwide survey of Chinese retail investors to elicit their trading motives. In cross-sectional regressions of respondents’ actual turnover on survey-based trading motives, perceived information advantage and gambling preference dominate other motives, though they are not the most prevalent biases based on survey responses.

Item Type: Article
Official URL: https://www.sciencedirect.com/journal/journal-of-f...
Additional Information: © 2021 Elsevier B.V.
Divisions: Finance
Subjects: H Social Sciences > HG Finance
B Philosophy. Psychology. Religion > BF Psychology
JEL classification: G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice; Investment Decisions
Date Deposited: 24 Mar 2021 13:09
Last Modified: 12 Jul 2024 16:03
URI: http://eprints.lse.ac.uk/id/eprint/109301

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