The Effects of Social-Based Signals on Investment Decisions in Copy Trading

16 Pages Posted: 23 Dec 2021

See all articles by Sándor Erdős

Sándor Erdős

affiliation not provided to SSRN

Tamás Papp

affiliation not provided to SSRN

Zsófia Vörös

affiliation not provided to SSRN

Abstract

In this study, we examine the importance and effects of social-based signals, i.e., signals generated by the community, when choosing a trader to copy in a mock-up social trading platform. Although the studies examining the effects of social influence in choosing a trader to copy and herding point toward the importance of social influence, these works do not evaluate how related signals in different constellations with other signals affect the decision-making of copying. The results of a two-alternative forced-choice experiment in which subjects made 18 investment decisions systematically show the importance of social-based signals in the selection of traders judged worth copying, i.e., their potential to influence investment decisions and the general preference toward positive social profiles.

Keywords: Social Trading, Copy trading, Social-based signals, Investing, Forced-choice experiment

Suggested Citation

Erdős, Sándor and Papp, Tamás and Vörös, Zsófia, The Effects of Social-Based Signals on Investment Decisions in Copy Trading. Available at SSRN: https://ssrn.com/abstract=3992287 or http://dx.doi.org/10.2139/ssrn.3992287

Sándor Erdős (Contact Author)

affiliation not provided to SSRN ( email )

No Address Available

Tamás Papp

affiliation not provided to SSRN ( email )

No Address Available

Zsófia Vörös

affiliation not provided to SSRN ( email )

No Address Available

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