Boys will be boys.ppt

B.Gambling There are two aspects which we consider: 1.risk-seeking 2.entertainment 1.risk-seeking Risk-seeking is when one demonstrates a preference for out-comes with greater variance but equal or lower expected return. Excessive trading decreases expected returns without decreasing variance. Thus risk-seeking may account for under diversification but not excessive trading. 2.Entertainment It may be that some men ,and to a lesser extent women ,trade for entertainment. Both men and women expect their own portfolios to outperform the market ,but that men anticipate a greater outperformance. (Gallup Poll finding.) . mutual fund managers most mutual fund managers, while aware that active management on average detracts value ,believe that their personal ability to manage is above average, Thus they are motivated to trade by overconfidence. Conclusion There is a simple and powerful explanation for the high levels of counterproductive trading in financial markets ：overconfidence. LOGO LOGO GENDER, OVERCONFIDENCE,  COMMON STOCK INVESTMENT BOYS WILL BE BOYS: ——Barber Odean Authors Odean Barber LOGO Construction Literatures 1 Data and empirical methods 2 Main results 3 Further explanations 4 Literatures 1 LOGO People tend to overestimate the precision of their knowledge Overconfidence is greatest for difficult tasks, for forecasts with low predictability, and for undertakings lacking fast, clear feedback. Overconfident investors overestimate the probability that their personal assessments of the security’s value are more accurate than others. Investors decrease their expected utility by trading too much. Overconfidence LOGO Both men and women exhibit overconfidence, men are generally more overconfident than women. Gender differences in self-confidence depend on the lack of clear and unambiguous feedback. Overconfidence results from self-serving attribution bias. Gender and Overconfidence Data and empirical methods 2 Data and Method H1：Men trade mor