| Submitted Version Download ( PDF | 745kB) |
Trading activity on social trading platforms – a behavioral approach
Article
Dorfleitner, Gregor and Scheckenbach, Isabel (2022) Trading activity on social trading platforms – a behavioral approach. Journal of Risk Finance 23 (1), pp. 32-54.DOI to cite this document: 10.5283/epub.47919
Abstract
Social trading platforms are considered to be amongst the major innovations in online trading. The purpose of this article is to analyze the trading activity of traders on social trading networks by taking a behavioral approach. We investigate the factors that influence the irrational part of trading activity derived from the key characteristics of these platforms, i.e. those dealing with social ...
Social trading platforms are considered to be amongst the major innovations in online trading. The purpose of this article is to analyze the trading activity of traders on social trading networks by taking a behavioral approach. We investigate the factors that influence the irrational part of trading activity derived from the key characteristics of these platforms, i.e. those dealing with social interaction. Our investigation utilizes an extensive set of trading data from two major platforms in Germany to study the trading behavior. We apply a fixed effects two-stage least squares approach to quantify the relationship between trading ctivity and performance and define overconfidence as the part of trading activity that is irrationally motivated and results in negative returns. Our results provide evidence for the negative relationship between overconfidence and return on social trading platforms. The article finds that the number of followers and some platform-specific features significantly affect the trading behavior of the traders. We contribute to literature by exploring how the novel social interaction characteristics of online trading impact trading activity by giving rise to a new dimension of overconfidence. In addition, we evidence that the different frameworks of the platforms motivate heterogenous behavioral responses by the signalers. Finally, we refine existing studies by applying a distinct methodology for modeling overconfidence.
Involved Institutions
Details
| Item type | Article | ||||
| Journal or Publication Title | Journal of Risk Finance | ||||
| Publisher | Emerald | ||||
| Volume | 23 | ||||
| Number of Issue or Book Chapter | 1 | ||||
| Page Range | pp. 32-54 | ||||
| Date | September 2022 | ||||
| Date of publication | 01 Sep 2021 09:17 | ||||
| Institutions | Business, Economics and Information Systems > Institut für Betriebswirtschaftslehre > Lehrstuhl für Finanzierung (Prof. Dr. Gregor Dorfleitner) | ||||
| Classification |
| ||||
| Keywords | Social trading platforms, overconfidence, social interaction, individual trading behavior, behavioral finance | ||||
| Dewey Decimal Classification | 300 Social sciences > 330 Economics | ||||
| Status | Published | ||||
| Refereed | Yes, this version has been refereed | ||||
| Created at the University of Regensburg | Yes | ||||
| URN of the UB Regensburg | urn:nbn:de:bvb:355-epub-479198 | ||||
| Item ID | 47919 |
Download Statistics
Download Statistics