scholarly journals The stock market as a casino: Associations between costly excessive stock market trading and problem gambling

2021 ◽  
Author(s):  
Moritz Mosenhauer ◽  
Philip Warren Stirling Newall ◽  
Lukasz Walasek

The stock market should be a unique kind of casino, where the average person wins money over time. However, previous research shows that excessive stock market trading can contribute to financial losses --- just like in any other casino. While gambling research has documented the adverse consequences of problem gambling, there has been comparatively less behavioral finance research on the correlates of excessive stock market trading. This study aimed to document whether excessive stock trading was positively associated with problem gambling, and whether this hypothesized association was robust to controlling for demographics, and objective measures of overconfidence and financial literacy in a convenience sample of 798 US investors. We found that self-reported relative stock portfolio turnover was positively associated with problem gambling, that this association was robust to controls, and occurred equally over investors of all self-reported portfolio sizes. This study showed that problem gamblers may also make suboptimal risky choices more generally, and that a behavioral dependence explanation for suboptimal investment decisions should be subject to further investigation in the behavioral finance literature.

Author(s):  
Moritz Mosenhauer ◽  
Philip W. S. Newall ◽  
Lukasz Walasek

Abstract Background and aims Personal investors decrease their stock market investment returns by trading frequently, which the behavioral finance literature has primarily explained via investors' overconfidence and low levels of financial literacy. This study investigates whether problem gambling can help account for frequent trading in a sample of active gambler/investors, as suggestive of frequent trading being in part driven by a behavioral addiction to gambling-like activities. Methods A retrospective cross-sectional study of 795 US-based participants, who reported both being active gamblers and holding stock market investments. Recollected stock trading activity (typical portfolio size, purchases and sales of stocks) was compared with scores on the Problem Gambling Severity Index, a financial literacy scale, and a measure of overconfidence. Results Self-reported relative stock portfolio turnover was positively associated with problem gambling scores. This association was robust to controls for financial literacy, overconfidence, and demographics, and occurred equally among investors of all self-reported portfolio sizes. Discussion and conclusions This study provides support for the hypothesis that behavioral addiction to gambling-like activities is associated with frequent stock market trading. New investment products that increase the ease of trading may therefore be detrimental to some investors.


2001 ◽  
Vol 88 (3) ◽  
pp. 734-740
Author(s):  
Daniel S. L. Roberts ◽  
Brenda E. MacDonald

The purpose of the present investigation was to examine how measures of imagery, creativity, and socioeconomic status relate to performance in a stock-market trading game. The 368 participants were students enrolled in an administration studies curriculum. A multiple regression analysis showed imaging scores to be a predictor of stock-trading performance as were creativity and socioeconomic status to a lesser extent. High imagers and high scorers on creativity and socioeconomic status made several times more profit with their portfolios. Results are discussed in terms of imagery having multiple repercussions on learning, e.g., memory and problem-solving. It is concluded that scores on imagery, creativity, and socioeconomic status, being weakly correlated, are interdependent and likely associated with personality traits shaped within a stimulating home or social environment.


2015 ◽  
Vol 18 (1) ◽  
pp. 51-60 ◽  
Author(s):  
Julijana Angelovska

Abstract Convenience sample survey was fielded to the Macedonian individual stock market investors to find out whether their investment behavior can be explained by some underlying factors grounded in the behavioral approach to the study of financial markets. Descriptive statistics technique has been used to analyze the investors’ attitude about the market’s efficiency and to test different theories of behavioral finance. The results have indicated that investors are not completely rational individuals as supposed by theories of traditional finance. Also in the theoretical framework of behavioral finance Macedonian investors use heuristics, or rules of thumb, when judging information and forming beliefs, but Macedonian investors do not behave as suggested within prospect theory and regret aversion.


2019 ◽  
Vol 4 (3) ◽  
pp. 253-259
Author(s):  
Nadiya REZNIK ◽  
Anton TRYHUBCHENKO

Introduction. Our stock market and stock exchange infrastructure are far behind European or US counterparts. Borrowing from them the experience of creating and using the developments in the domestic market will allow to develop the economy. Foreign indicators, research and sources, most of which are in the open, can give impetus to young and prospective scientists to improve the economic system in general and the development of the stock market in particular. The imperfection of the domestic legislation and the lack of transparency in the economic system do not allow to develop the stock market fully and effectively. It is not possible to find the perfect metric for every market, for every generation and for every asset, but it is possible and necessary to look for ways of analyzing and exploring data to be able to extrapolate them to current economic and geopolitical conditions. The purpose of the study is to analyze one of the known in the West indexes, but not common in the domestic expanses in the world of finance and quotations on Wall Street. Objectives of the article: increase the financial literacy of the population; to encourage prospective specialists to develop the stock market; to analyze known world sources and economic indicators; to convey the opportunity and feasibility of analyzing the economy based on stock market analysis. Conclusions. An important advantage of this indicator is its consolidated structure and the presence of several evaluation criteria. An easy and understandable form of presentation and prognostic character are also additional positive features. Skeptics argue that this index is more a tool for researching the current market condition than a predictive indicator, also pointing to its volatile nature and not always accurate signals. It is definitely worth using this indicator in your own analytical system, but it needs to be analyzed in parallel with other macroeconomic indicators. Keywords: stock market, economy, stock market, trading, volatility, stocks, bonds, options, futures.


Author(s):  
Claudia Venuleo ◽  
Tiziana Marinaci ◽  
Piergiorgio Mossi

Gambling participation among older people has grown over the years. Elders constitute a large and fast-growing population in Italy, but little empirical evidence describes gambling patterns among older Italian adults and the problem gambling (PG)’s psychosocial determinants, so a range of questions which are crucial to orient prevention strategies remain unanswered. The present study aims to investigate habits, representations, levels of engagement in gambling among Italian elders and the role of loneliness, social support and well-being in explaining their problem with gambling. A convenience sample of 165 participants (mean age: 66.93; SD = 5.73; women: 43.1%) was involved. Gambling activities, habits, representations and PG rates were examined. A group “at moderate risk/problem gambling” (scoring >7 on PGSI, n = 40) and a control group (scoring 0 on PGSI, n = 40) were selected from the whole sample, balanced on socio-demographic characteristics; a one-way analysis of variance (ANOVA) was used to compare the two groups on the target psychosocial variables. 11.5% of the sample was found to meet the PGSI criteria for PG; 26.7% for moderate risk; 11.5% for problem gambling; 50.3% were classified as no-problem gamblers. Scratch cards were the main form of gambling among all groups; the chance to make more money and to distract oneself from other problems were the main reasons to gamble. Finally, the group “at moderate risk/problem gambling,” compared to the control group, expressed higher loneliness, as well as lower perceived social support and well-being.RésuméLa pratique des jeux de hasard chez les personnes plus âgées augmente au fil des années. Les aînés représentent un segment important et à croissance rapide de la population en Italie, mais peu de données empiriques décrivent les habitudes de pratique de jeux de hasard des adultes italiens plus âgés et les déterminants psychosociaux du jeu compulsif. Tout un éventail de questions essentielles à l’orientation des stratégies de prévention reste sans réponse. La présente étude se penche sur les habitudes, les représentations et les niveaux de pratique de jeux de hasard chez les aînés italiens, ainsi que le rôle de la solitude, du soutien social et du bien-être pour expliquer leurs problèmes liés au jeu, à l’aide d’un échantillon de commodité de 165 participants (moyenne d’âge : 66,93; écart-type de la population = 5.73; femmes : 43,1 %). La pratique des jeux de hasard, les habitudes, les représentations et le jeu compulsif ont été examinés. Un groupe « à risque moyen/jeu compulsif » (pointage >7 sur l’indice de gravité de jeu compulsif (IGJC), n = 40) et un groupe témoin (pointage de 0 sur l’IGJC, n = 40) ont été choisis parmi l’ensemble de l’échantillon, équilibrés du point de vue des caractéristiques sociodémographiques; une analyse de variance à un critère de classification (ANOVA) a été utilisée pour comparer les deux groupes par rapport aux variables psychosociales cibles. On a constaté que 11,5 % de l’échantillon répondaient aux critères de jeu compulsif de l’IGJC; 26,7 % répondaient aux critères de risque modéré; 11,5 %, aux critères de jeu compulsif; et 50,3 % étaient classés comme des joueurs ne présentant pas de problème. Les cartes à gratter constituaient la forme principale de jeu de hasard dans tous les groupes; les principales raisons de jouer étaient la possibilité de faire plus d’argent et d’oublier d’autres problèmes. Enfin, par rapport au groupe témoin, le groupe « à risque moyen/jeu compulsif » a exprimé un plus grand sentiment de solitude et percevait un moins grand soutien social et un moins grand bien-être.


2019 ◽  
Author(s):  
David Zendle

Loot boxes are items in video games that may be paid for with real-world money, but which contain randomised contents. There is a reliable correlation between loot box spending and problem gambling severity: The more money gamers spend on loot boxes, the more severe their problem gambling tends to be. However, it is unclear whether this link represents a case in which loot box spending causes problem gambling; a case in which the gambling-like nature of loot boxes cause problem gamblers to spend more money; or whether it simply represents a case in which there is a general dysregulation in in-game spending amongst problem gamblers, nonspecific to loot boxes.The multiplayer video game Heroes of the Storm recently removed loot boxes. In order to better understand links between loot boxes and problem gambling, we conducted an analysis of players of Heroes of the Storm (n=112) both before and after the removal of loot boxes.There were a complex pattern of results. In general, when loot boxes were removed from Heroes of the Storm, problem gamblers appeared to spend significantly less money in-game in contrast to other groups. These results suggest that the presence of loot boxes in a game may lead to problem gamblers spending more money in-game. It therefore seems possible that links between loot box spending and problem gambling are not due to a general dysregulation in in-game spending amongst problem gamblers, but rather are to do with specific features of loot boxes themselves.


2017 ◽  
Vol 93 (3) ◽  
pp. 25-57 ◽  
Author(s):  
Eli Bartov ◽  
Lucile Faurel ◽  
Partha S. Mohanram

ABSTRACT Prior research has examined how companies exploit Twitter in communicating with investors, and whether Twitter activity predicts the stock market as a whole. We test whether opinions of individuals tweeted just prior to a firm's earnings announcement predict its earnings and announcement returns. Using a broad sample from 2009 to 2012, we find that the aggregate opinion from individual tweets successfully predicts a firm's forthcoming quarterly earnings and announcement returns. These results hold for tweets that convey original information, as well as tweets that disseminate existing information, and are stronger for tweets providing information directly related to firm fundamentals and stock trading. Importantly, our results hold even after controlling for concurrent information or opinion from traditional media sources, and are stronger for firms in weaker information environments. Our findings highlight the importance of considering the aggregate opinion from individual tweets when assessing a stock's future prospects and value.


IEEE Access ◽  
2021 ◽  
Vol 9 ◽  
pp. 30898-30917 ◽  
Author(s):  
Fernando G. D. C. Ferreira ◽  
Amir H. Gandomi ◽  
Rodrigo T. N. Cardoso

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