74). This dearth of information was likely caused by a reluctance to examine investment decisions on the part of investors themselves; nobody likes finding out that their "thought-out" considerations are not any more accurate than gut choices, and in fact, those gut choices likely had more influence than all of their mental work.
In the last decade, however, strides have been made in the study and analysis of investment behavior, revealing surprising details about what goes in to making stock trades. The first important work in the study of individual investment behavior was the realization that human beings do not always act rationally in regards to financial decisions, because according to the previously quoted Brad Barber and his co-author Terrance Odean, "the field of modern financial economics assumes that people behave with extreme rationality, but they do not" (Barber & Odean, 1999, p.41). Although "differences in investor literacy about financial markets" are responsible for some of these irrational decisions, there is ample evidence to suggest that psychology and personality are as important as financial literacy or education (Dhar & Zhu, 2006, p.726).
In a 2001 essay titled "What Makes Investors Trade?" Mark Grinblatt and Matti Keloharju examine some of the factors that influence investor's decisions to make certain trades. They argue that "the extraordinary degree of trading activity in financial markets represents one of the great challenges to the field of finance," because "many theoretical models in finance […] argue that there should be no trade at all," and furthermore, "empirical research […] also shows that the trades of many investors not only fail to cover transaction costs, but tend to lose money before transaction costs" (Grinblatt & Keloharju, 2001, p.589).
This latter scenario is precisely what happened when men sold their stock at all-time lows during the recent economic crisis, and Grinblatt and Keloharju revisited the topic in their 2009 essay "Sensation Seeking, Overconfidence, and Trading Activity." They found that after accounting "for a host of variables, including wealth, income, age, number of stocks owned, marital status, and occupation, […] overconfident investors and those investors most prone to sensation seeking trade more frequently" (Grinblatt & Keloharju, 2001, p.459). Although sex was not one of the variables considered in Grinblatt and Keloharju's analysis, those traits which contribute to more frequent trading are precisely those identified in men in both Sommer's overall article and the research conducted regarding the nucleus accumbens and the effect of certain images on financial risk-taking.
An additional study from 2009, "Who Gambles in the Stock Market?" "shows that the propensity to gamble and investment decisions are correlated," meaning that the very same traits which inspire gamblers to spend money on lotteries and other "investments" with a low chance of return affect those who spend money on the stock market, which suggests that the distinction between "investing" and "betting" is nearly nonexistent (Kumar, 2009, 1889). Thus, the...
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