Retail Bubble Riders

Deuskar, P and Upadhyay, S and Yuferova, D (2022) Retail Bubble Riders. Working Paper. SSRN.

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We investigate the behavior of retail traders during repeated bubble episodes using detailed data from the Bombay Stock Exchange. We show that, after controlling for attrition, retail traders are more likely to participate in bubble stocks if they have prior bubble experience. Retail traders making extreme profits in the previous bubble episodes are less prone to engaging in future bubble riding. Moving from extreme profits to extreme losses in the previous bubble episodes monotonically increases the likelihood of future bubble participation. This pattern is consistent with the break-even effect observed in the context of prospect theory preferences.

Item Type: Monograph (Working Paper)
Subjects: Finance
Date Deposited: 08 Aug 2023 08:06
Last Modified: 08 Aug 2023 08:06

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