The Behavioral Dimensions of Trading: Proximal and Distal Influences on Performance

Stephen Gould, Baruch College, CUNY, USA
Ana Valenzuela, Baruch College, CUNY, USA
Luke Kachersky, Fordham University, USA
Richard Holowczak, Baruch College, CUNY, USA
Decision-making theory suggests that stock-market trading decisions are in part based on the traders’ personal psychology. However, some cognitive traits of traders have been overlooked, perhaps because they appear too distal to the actual trading decision process. We investigated these traits in a simulated trading setting. In particular, we sought to identify biases that result from personality traits. To accomplish this goal we created a simulated market in which participants, endowed with cash and stock, traded with each other and were motivated to act in their self-interests by a large cash prize for the top trader. Despite the incentive we uncover personality traits that shape traders’ strategies, but at times undermine their behavior and performance.
[ to cite ]:
Stephen Gould, Ana Valenzuela, Luke Kachersky, and Richard Holowczak (2010) ,"The Behavioral Dimensions of Trading: Proximal and Distal Influences on Performance", in NA - Advances in Consumer Research Volume 37, eds. Margaret C. Campbell, Jeff Inman, and Rik Pieters, Duluth, MN : Association for Consumer Research, Pages: 166-169 .