Abstract
We investigate consequences of the self-attribution bias for nonprofessional traders. By applying a textual analysis of more than 44,000 public comments on a large social trading platform, we contribute to empirical literature on investment and trading behavior in three ways: First, we show that one component of the self-attribution bias, the self-enhancement bias, leads to subsequent underperformance. Second, results support the theory that traders become overconfident due to biased self-enhancement. Third, we find that traders’ social trading portfolios attract higher investment flows from investors when showing self-enhancement biased behavior.
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