On the Survival of Overconfident Traders in a Competitive Securities Market

By David A. Hirshleifer, G. Luo. 2000

283 citations recorded by the source corpus.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/cbf904ffb8a695d569174fdee4bb7c8dd566e8da

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. Raul Susmel
2. Wen-I Chuang
3. David A. Hirshleifer
4. Siew Hong Teoh
5. Avanidhar Subrahmanyam
6. Diego García
7. Andrew W. Lo
8. Martin Weber

In Finance

1. David A. Hirshleifer
2. Siew Hong Teoh
3. Avanidhar Subrahmanyam
4. Raul Susmel
5. Wen-I Chuang
6. Diego García
7. Sheridan Titman
8. Martin Weber

Citations in the corpus

• Overconfidence and trading volume (2007, background): “Examples are Daniel, Hirshleifer, and Subrahmanyam (1998), Daniel, Hirshleifer, and Subrahmanyam (2001), Hirshleifer and Luo (2001), Gervais and Odean (2001), and Wang (2001).”
• Overconfidence and Market Efficiency with Heterogeneous Agents (2006, background): “Hirshleifer and Luo (2001) propose an evolutionary model in which the replication of rational and overconfident is assumed to be increasing in the profitability (expected profits) of their strategies.”
• The Genetics of Investment Biases (2014, background): “Some evolutionary models have appeared in financial economics research (e.g., Luo, 1998; Hirshleifer and Luo, 2001).”
• Impact of herding behavior and overconfidence bias on investors’ decision-making in Pakistan (2019, unknown): “Hirshleifer and Luo (2001) studied the survival of overconfident trader in competitive equity markets and the overconfident performed better than rational investors did.”
• Who is the more overconfident trader? Individual vs. institutional investors (2011, background): “…also made in De Long, Shleifer, Summers, and Waldmann (1991), Kyle and Wang (1997), Benos (1998), Odean (1998), Wang (1998, 2001), Daniel, Hirshleifer, and Subrahmanyam (2001), Hirshleifer and Luo (2001), Caballé and Sákovics (2003), and Scheinkman and Xiong (2003). detracts from their performance.”
• Investors’ trading activity: A behavioural perspective and empirical results (2011, background): “A similar argument that overconfidence leads to greater trading activity is made by Daniel et al. (2001), Hirshleifer and Luo (2001), Wang (2001) and Scheinkman and Xiong (2003).”
• Overconfidence in investment decisions: An experimental approach (2005, background): “Though overconfident agents could thus be exploited by other market participants and driven out of the market, some studies show that overconfidence can persist (e.g., Bernardo and Welch forthcoming, Gervais and Odean 2001, Hirshleifer and Luo 2001, Kyle and Wang 1997, Wang 2001).”
• An Experimental Test of the Impact of Overconfidence and Gender on Trading Activity (2009, unknown): “The impacts of high overconfidence and low risk-aversion on trading volume are similar in that they both lead to greater trading volume (Hirshleifer and Luo (2001)).”
• Investor Psychology in Capital Markets: Evidence and Policy Implications (2001, unknown): “…are foolishly aggressive in their trading, they may earn higher rewards for bearing more risk (see, e.g., DeLong et al (1990b, 1991)) or for exploiting information signals more aggressively (Hirshleifer and Luo (2001), and may gain from inimidating competing informed traders (Kyle and Wang (1997)).”
• Reconciling Efficient Markets with Behavioral Finance: The Adaptive Markets Hypothesis (2005, background): “Hirshleifer and Luo (2001) consider the long-run prospects of overconfident traders in a competitive securities market.”
• The Adaptive Markets Hypothesis (2004, unknown): “See, for example, Kendall (1953), Osborne (1959, 1962), Roberts (1959, 1967), Larson (1960), Cowles (1960), Working (1960), Alexander (1961, 1964), Granger and Morgenstern (1963), Mandelbrot (1963), Fama (1965), Fama and Blume (1966), and Cowles and Jones (1973).”
• CEO Overconfidence and Financial Crisis: Evidence from Bank Lending and Leverage (2015, unknown): “Second, overconfident managers overvalue the prospects of borrowers and underestimate the riskiness of their investments (Hirshleifer and Luo, 2001).”
• Limited Attention, Information Disclosure, and Financial Reporting (2003, background): “On the other hand, Hirshleifer and Luo (2001) find that even in a competitive securities market, overconfident informed investors can earn higher expected profits than rational informed investors by exploiting superior information more aggressively. aggressive trading and high risk bearing.”