Does Reminding of Behavioural Biases Increase Returns from Financial Trading? A Field Experiment

26 Pages Posted: 18 Sep 2017

See all articles by Maria De Paola

Maria De Paola

Università degli Studi della Calabria - Department of Economics and Statistics

Francesca Gioia

Università degli Studi della Calabria

Fabio Piluso

University of Calabria

Abstract

We ran a field experiment to investigate whether nudge policies, consisting in behavioural insight messaging, help to improve performance in financial trading. Our experiment involved students enrolled in a financial trading course in an Italian University who were invited to trade on Borsa Italiana's virtual platform. Students were randomly assigned to a control group and a treatment group. Treated students received a message reminding them of the existence of behavioural biases in financial trading. We find that treated students significantly improve the performance of their portfolio. Several behaviours may explain the increase in performance. We find evidence pointing to a reduction in the home and status quo biases for risk averse nudged participants.

Keywords: financial trading, behavioural biases, reminders, nudges, home bias, status quo bias, risk aversion

JEL Classification: D14, E21, E22, O16

Suggested Citation

De Paola, Maria and Gioia, Francesca and Piluso, Fabio, Does Reminding of Behavioural Biases Increase Returns from Financial Trading? A Field Experiment. IZA Discussion Paper No. 10983. Available at SSRN: https://ssrn.com/abstract=3037864

Maria De Paola (Contact Author)

Università degli Studi della Calabria - Department of Economics and Statistics ( email )

via Ponte Bucci
Arcavacata di Rende, Cosenza 87036
Italy

Francesca Gioia

Università degli Studi della Calabria

Ponte Bucci, Cubo 3C
Rende, Cosenza 87036
Italy

Fabio Piluso

University of Calabria

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