Boys will be Boys: Gender, Overconfidence, and Common Stock Investment
Abstract
Theoretical models predict that overconfident investors trade excessively. We test this prediction by partitioning investors on gender. Psychological research demonstrates that, in areas such as finance, men are more overconfident than women. Thus, theory predicts that men will trade more excessively than women. Using account data for over 35,000 households from a large discount brokerage, we analyze the common stock investments of men and women from February 1991 through January 1997. We document that men trade 45 percent more than women. Trading reduces men's net returns by 2.65 percentage points a year as opposed to 1.72 percentage points for women.
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Women exhibit lower levels of overconfidence than men.
“Consistent with this view, numerous studies fi nd that women exhibit lower levels of overcon fi dence than men (Barber & Odean, 2001; Dean & Ortoleva, 2019; Niederle & Vesterlund, 2007; Waldman, 1994).”
From Talking the talk, not walking the walk: The coevolution of overconfidence and loss aversion (2026) · cites this paper as Barber & Odean, 2001
Behavioral finance literature demonstrates that investors often rely on heuristics and are influenced by cognitive and emotional biases while making investment decisions.
“Behavioral finance literature demonstrates that investors often rely on heuristics and are influenced by cognitive and emotional biases while making investment decisions (Kahneman & Tversky, 1979; Barber & Odean, 2001).”
From Technology-Enabled Trading and Behavioral Biases of Retail Investors in Futures and Options Markets (2026) · cites this paper as Barber & Odean, 2001
Barber and Odean (2001) established that overconfidence significantly increases trading frequency among retail investors, often resulting in lower net returns.
“Barber and Odean (2001) further established that overconfidence significantly increases trading frequency among retail investors, often resulting in lower net returns.”
From Technology-Enabled Trading and Behavioral Biases of Retail Investors in Futures and Options Markets (2026) · cites this paper as Barber and Odean (2001)
When facing market uncertainty, traders are susceptible to cognitive biases such as overconfidence, loss aversion, and herding behavior.
“When facing market uncertainty, traders are susceptible to cognitive biases such as overconfidence (overestimating predictive ability), loss aversion (fear of realising losses), and herding behavior (following crowd decisions without independent analysis).”
From The Role of Trader Psychology in Enhancing Forex Trading Profitability Through Technical Analysis, Fundamental Analysis, and Risk Management at Wijaya Trading Community Indonesia (2026) · cites this paper as Barber & Odean, 2001
These biases drive decisions that contradict established trading plans and systematically erode long-term profitability.
“These biases drive decisions that contradict established trading plans and systematically erode long-term profitability (Kahneman & Tversky, 1979; Barber & Odean, 2001).”
From The Role of Trader Psychology in Enhancing Forex Trading Profitability Through Technical Analysis, Fundamental Analysis, and Risk Management at Wijaya Trading Community Indonesia (2026) · cites this paper as Barber & Odean, 2001
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References 81 · Cited by 5,276
- Authors
- Barber, B. M., & Odean, T.
- Affiliations
- University of California, Davis (US)
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 2001-02-01
- Volume
- 116
- Issue
- 1
- Pages
- 261-292
- ISSN
- 0033-5533 (ISSN-L)
- 1531-4650
- OpenAlex
- W3126080930
- Cited by
- 5,276
- References
- 81
- Citations by year
- 2026: 310 · 2025: 343 · 2024: 358 · 2023: 346 · 2022: 311 · 2021: 330 · 2020: 285 · 2019: 278 · 2018: 291 · 2017: 246 · 2016: 232 · 2015: 238 · 2014: 256 · 2013: 212 · 2012: 224
- FWCI
- 74.52
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- The Quarterly Journal of Economics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
- Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
- Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy, Pension, Retirement Analysis
- Keywords
- investor overconfidence, gender differences, common stock investment, retail investors, gender and finance
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