Compulsive Gambling in the Financial Markets: Evidence from Two Investor Surveys
40 Pages Posted: 16 Aug 2017 Last revised: 28 May 2019
Date Written: April 30, 2019
This study shows that a group of individual investors in the financial markets displays symptoms of compulsive gambling, or an addiction to trading, based on a standard diagnostic checklist from the American Psychiatric Association. In a representative sample of Dutch retail investors, we find that 4.4% of the investors meet the criteria for compulsive gambling in the financial markets. Another 3.6% meet the criteria for problem gambling, which is a less severe form of gambling disorder. Investors with symptoms of compulsive gambling problems tend to follow a more active and speculative trading style, indicated by a higher frequency of stock trading, day trading and investing in derivatives and leveraged products. In addition, compulsive gamblers tend to have more financial problems and lower socio-economic status than other investors.
Keywords: Individual Investors, Trading Behavior, Gambling
JEL Classification: G11, G02, L83
Suggested Citation: Suggested Citation