Weiss-Cohen, L., Newall, P., Bart, Y. et al. (4 more authors) (2024) When Vegas comes to Wall Street: Associations between stock price volatility and trading frequency among gamblers. International Journal of Mental Health and Addiction. ISSN 1557-1874
Abstract
Both gambling and trading involve risk-taking in exchange for potential financial gains. In particular, speculative high-risk high-frequency trading closely resembles disordered gambling behaviour by attracting the same individuals who tend to be overconfident, sensation-seekers, and attracted to quick large potential payoffs. We build on these studies via an incentivised experiment, in which we examine how manipulated levels of market volatility affected trading frequency. Gamblers (N=604) were screened based on the existence of household investments and recruited across the four categories of the Problem Gambling Severity Index. The volatility of stocks was manipulated between-participants (high vs. low). Participants traded fictitious stocks and were provided bonuses based on the results of their trading activity (M=US$4.77, range=[0, 16.99]). Participants traded more often in the high-volatility market, and this finding remained robust after controlling for financial literacy, overconfidence, age, and gender. Many investors trade more frequently than personal finance guides advise, and these results suggest that individuals are more likely to commit this error in more volatile markets. Exploratory analyses suggest that the effect of the volatility manipulation was strongest amongst gamblers who were at low-risk of experiencing gambling harms. As they might be otherwise considered low-risk, these individuals could be overlooked by protective gambling interventions yet nonetheless suffer unmitigated financial harms due to unchecked excessive trading.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © The Author(s) 2024. This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/. |
Keywords: | Investing; Personal finance; Disordered gambling; Behavioural finance |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Management Division (LUBS) (Leeds) > Management Division Decision Research (LUBS) |
Depositing User: | Symplectic Publications |
Date Deposited: | 18 Dec 2023 11:56 |
Last Modified: | 03 Apr 2024 15:05 |
Status: | Published online |
Publisher: | Springer |
Identification Number: | 10.1007/s11469-023-01229-1 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:206667 |