This Article Full Text (PDF) e-companion References Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Alert me to new issues of the journal Download to citation manager Citing Articles Citing Articles via Google Scholar Google Scholar Articles by Dorn, D. Articles by Sengmueller, P. Search for Related Content

Trading as Entertainment?

LeBow College of Business, Drexel University, Philadelphia, Pennsylvania 19104
CentER, Tilburg University, 5000 LE Tilburg, The Netherlands
dd79{at}drexel.edu
p.sengmuller{at}uvt.nl

Among 1,000 German brokerage clients for whom both survey responses and actual trading records are available, investors who report enjoying investing or gambling turn over their portfolio at twice the rate of their peers. Including entertainment attributes as additional explanatory variables in cross-sectional regressions of portfolio turnover on objective investor attributes more than doubles the fraction of the total variation of portfolio turnover that can be explained. The results are robust to controlling for gender and proxies for overconfidence constructed from survey responses. Nonpecuniary benefits of trading thus appear to offer a straightforward explanation of the "excessive trading puzzle."

Key Words: investor decision making; trading volume
History: Received: October 8, 2007; accepted: October 19, 2008.