Smoking hot portfolios? self-control and investor decisions

Self-control failure is among the major pathologies (Baumeister et al. (1994)) affecting individual investment decisions which has hardly been measurable in empirical research. We use cigarette addiction identified from 
Self-control failure is among the major pathologies (Baumeister et al. (1994)) affecting individual investment decisions which has hardly been measurable in empirical research. We use cigarette addiction identified from checking account transactions to proxy for low self-control and compare over 5,000 smokers to 14,000 nonsmokers. Smokers self-directing their investment trade more frequently, exhibit more biases and achieve lower portfolio returns. We also find that smokers, some of which might be aware of their limited levels of self-control, exhibit a higher propensity than nonsmokers to delegate decision making to professional advisors and fund managers. We document that such precommitments work successfully.
…show moreshow less

Download full text files

Export metadata

  • Export Bibtex
  • Export RIS
Metadaten
Author:Charline Uhr, Steffen Meyer, Andreas Hackethal
URN:urn:nbn:de:hebis:30:3-492389
URL:https://ssrn.com/abstract=3347625
Parent Title (English):SAFE working paper series ; No. 245
Series (Serial Number):SAFE working paper series (245)
Publisher:SAFE
Place of publication:Frankfurt am Main
Document Type:Working Paper
Language:English
Year of Completion:2019
Year of first Publication:2019
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2019/03/07
Tag:individual investor; portfolio allocation; self-control; trading behavior
Issue:March 2019
Pagenumber:48
HeBIS PPN:447162330
Institutes:Wirtschaftswissenschaften
House of Finance (HoF)
Center for Financial Studies (CFS)
Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:330 Wirtschaft
JEL-Classification:D14 Personal Finance
G11 Portfolio Choice; Investment Decisions
G21 Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
G41
Sammlungen:Universitätspublikationen
Licence (German):License LogoDeutsches Urheberrecht

$Rev: 11761 $