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Copy trading

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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...

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Bibliographic Details
Main Authors: Apesteguia, Jose (Author) , Oechssler, Joerg (Author) , Weidenholzer, Simon (Author)
Format: Book/Monograph Working Paper
Language:English
Published: Heidelberg University of Heidelberg, Department of Economics June 27, 2018
Series:Discussion paper series / University of Heidelberg, Department of Economics no. 649
In: Discussion paper series (no. 649)

DOI:10.11588/heidok.00024778
Subjects:
Graue Literatur
Online Access:Resolving-System, kostenfrei, Volltext: http://dx.doi.org/10.11588/heidok.00024778
Resolving-System, kostenfrei, Volltext: http://nbn-resolving.de/urn:nbn:de:bsz:16-heidok-247788
Verlag, kostenfrei, Volltext: http://archiv.ub.uni-heidelberg.de/volltextserver/24778/1/Apesteguia%2C%20Oechssler%2C%20and%20Weidenholzer%2C%202018%2C%20dp%20649.pdf
Resolving-System, kostenfrei: http://hdl.handle.net/10419/207625
Resolving-System, kostenfrei, Volltext: https://nbn-resolving.org/urn:nbn:de:bsz:16-heidok-247788
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Author Notes:Jose Apesteguia, Jörg Oechssler, and Simon Weidenholzer
Description
Summary: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 an 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 reduces ex-ante welfare, and leads to excessive risk taking.
Item Description:Key words: Copy trading, Financial markets, Social networks, Imitation, Experiment; JEL codes: C91, D81, G12, G20, G41
Physical Description:Online Resource
DOI:10.11588/heidok.00024778

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