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Copy trading

Apesteguia, Jose and Weidenholzer, Simon and Oechssler, Jörg (2019) 'Copy trading.' Management Science. ISSN 0025-1909 (In Press)

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Abstract

Copy trading allows traders in social networks to receive information on the success of other agents in financial markets and to directly copy their trades. Internet platforms like eToro, ZuluTrade, and Tradeo have attracted millions of users in recent years. The present paper studies the implications of copy trading for the risk taking of investors. Implementing a novel experimental financial asset market, we show that providing information on the success of others leads to a significant increase in risk taking of subjects. This increase in risk taking is even larger when subjects are provided with the option to directly copy others. We conclude that copy trading leads to excessive risk taking.

Item Type: Article
Uncontrolled Keywords: Copy trading; Financial markets; Social networks; Imitation; Experiment
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Elements
Date Deposited: 19 Sep 2019 10:36
Last Modified: 19 Sep 2019 10:36
URI: http://repository.essex.ac.uk/id/eprint/25396

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