Invitation to the VGSF Research Seminar!

This semester the seminar usually takes place on Friday from 15:30 to 17:00 in HS 7 (Bauteil III, 3rd floor) at the BWZ in Brünnerstrasse 72, 1210 Wien. The detailed seminar schedule and the papers can be found on the VGSF-website (www.vgsf.ac.at --> Activities --> Research Seminar).

On March 9th there will be TWO (!!!) VGSF research seminars from 14:00 (!!!) to 17:00:

(A) Prof. Matti Keloharju (Helsinki School of Economics): Sensation Seeking, Overconfidence, and Trading Activity ABSTRACT: This study analyzes the role that two psychological attributes—sensation seeking and overconfidence—play in the tendency of investors to trade stocks. Equity trading data are combined with data from an investor’s tax filings, driving record, and psychological profile. We use the data to construct measures of overconfidence and sensation seeking tendencies. Controlling for a host of variables, including wealth, income, age, number of stocks owned, marital status, and occupation, we find that overconfident investors and those investors most prone to sensation seeking trade more frequently.

(B) Prof. Laurent Calvet (HEC Paris): Down or Out: Assessing the Welfare Costs of Household Investment Mistakes ABSTRACT: This paper investigates the efficiency of household investment decisions in a unique dataset containing the disaggregated wealth and income of the entire population of Sweden. The analysis focuses on two main sources of inefficiency in the financial portfolio: underdiversification of risky assets (“down”) and nonparticipation in risky asset markets (“out”). We find that while a few households are very poorly diversified, the cost of diversification mistakes is quite modest for most of the population. For instance, a majority of participating Swedish households are sufficiently diversified internationally to outperform the Sharpe ratio of their domestic stock market. We document that households with greater financial sophistication tend to invest more efficiently but also more aggressively, so the welfare cost of portfolio inefficiency tends to be greater for these households. The welfare cost of nonparticipation is smaller by almost one half when we take account of the fact that nonparticipants would be unlikely to invest efficiently if they participated in risky asset markets.

Both professors will be available for individual meetings on Friday before the seminars. If you would like to meet them, please contact Michael Halling.

Best, Michael Halling