By: |
Zilu Shang (ICMA Centre, Henley Business School, University of Reading);
Chris Brooks (ICMA Centre, Henley Business School, University of Reading);
Rachel McCloy (University of Reading) |
Abstract: |
Investors are now able to analyse more noise-free news to inform their trading
decisions than ever before. Their expectation that more information means
better performance is not supported by previous psychological experiments
which argue that too much information actually impairs performance. To test
whether more information always means better performance in the stock markets,
an experiment is conducted based on a trading simulation manipulated from a
real market-shock. The results indicate that the explicitness of information
neither improves nor impairs participants’ performance effectiveness from the
perspectives of returns, share and cash positions, and trading volumes.
However, participants’ performance efficiency is significantly affected by
information explicitness. Although they need less time to implement their
decisions when placing an order, explicitly informed investors are punished by
making more mistakes. |
Keywords: |
explicitness of information, performance effectiveness, performance efficiency, individual investors, experimental finance |
JEL: |
C91 D82 G02 |
Date: |
2013–06 |
URL: |
http://d.repec.org/n?u=RePEc:rdg:icmadp:icma-dp2013-05&r=neu |