"Peer Pressure: Can Social Interaction Explain the Disposition Effect?" (2015)
Local financial development causes long-lasting improvements in consumer financial health. We use credit panel data and variation in financial development across Native American reservations caused by Congressionally imposed differences in court enforcement of civil contracts. Young consumers on reservations with more financial activity more quickly engage in formal credit markets, an effect that leads to greater long-run financial health.
AFA Boston 2015, EFA Vienna 2015, NFA 2014 Revisions Requested: Review of Financial Studies
Social interaction increases traders' disposition effect. Using novel data from a
social network linked to individual investment accounts, traders
increase their susceptibility to the disposition effect following
exposure to the network.
"Can Leverage Constraints Make (Some) Investors Better Off?" (2015)
EFA Lugano 2014, SFS Cavalcade 2015, NFA 2015
Finalist for best paper award in Asset Pricing at the 2015 SFS Cavalcade
is inversely related to individual investor performance. Evidence comes from CFTC regulation capping the maximum permissible leverage available to U.S. retail traders compared to unregulated European traders who trade on the same
brokerages. Overconfidence jointly explains demand for leverage and subsequent poor performance. Supplemental Materials
"YOLO: Mortality Beliefs and Household Finance Puzzles" (2015) w/ Kristian Myrseth and Raphael Schoenle
Norman Award Grant for creative projects in the Social Sciences, NFA 2015, CESifo Behavioral Economics 2015, EWFC2016, IDC Summer Conference 2016
Media: Wall Street Journal: Pro, MarketWatch
Subjective mortality beliefs are fat-tailed and affect consumption/savings decisions. A run-of-the-mill life-cycle model calibrated to subjective mortality beliefs can explain under-saving while young, under-consumption while retired, and the high equity premium.
"Facebook Finance: How Social Interaction Propagates Active Investing" (2014) w/ David Simon
AFA San Diego 2013
Media: Wall Street Journal, Quartz, The Street
patterns of communication between traders supports the growth of active
strategies. Using novel data from a social network linked to individual
investment accounts, traders broadcast their own successes, while
recipients trade more when their peers perform well.