@article{44568bbd65934cb594e44c5831df7574,
title = "The Conflicting Links between Forecast-Confidence and Trading Propensity",
abstract = "While finance studies suggest that forecast-confidence motivates trading, the experimental findings regarding the confidence-trading links are inconclusive and statistically weak. Attempting to bridge the gap, we modify the standard interval forecasting task to measure forecast-confidence more directly. The adapted task is utilized to test the confidence-trading correlations at the attitudinal level and in specific scenarios. The attitudinal test surprisingly reveals that forecast-confidence negatively correlates with the inclination to churn one{\textquoteright}s stock portfolio, although confidence in profitability indeed boosts the willingness to trade particular stocks. The attitudinal correlation is endogenous, brought by opposite personality and competence effects on confidence and trading.",
keywords = "Forecast-confidence, Overprecision, Personality, Trading propensity",
author = "Doron Sonsino and Yaron Lahav and Amir Levkowitz",
note = "Funding Information: We thank Ido Erev, the Technion R&D foundation, and the research authority at COMAS (College of Management Academic Studies), for supporting this research. The study was presented at the 2017 SPUDM conference at the Technion, the IAREP 2017 meetings in Israel, the 2017 European ESA meetings in Vienna and seminars at the Gothenburg Research Institute, the Technion, and Ben-Gurion University. We have benefited from exchanges with Klajdi Bregu, David Budescu, Ido Erev, Yoav Ganzach, Sven Hemlin, Magnus Jansson, Ido Kallir, Doron Kliger, Ferdinand Langnickel, Christoph Merkle, Orkan Nadirov, Nigel Harvey, Dilek Onkal and Eldad Yechiam. Publisher Copyright: {\textcopyright} 2020, {\textcopyright} 2020 The Institute of Behavioral Finance.",
year = "2020",
month = jan,
day = "1",
doi = "10.1080/15427560.2020.1792911",
language = "English",
pages = "1--18",
journal = "Journal of Behavioral Finance",
issn = "1542-7560",
publisher = "Taylor and Francis Ltd.",
}