Boys will be boys: Gender, overconfidence, and common stock investment

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 overconf ident than women. Thus, theory predicts that men will trade more excessivel y than women. Using account data for over 35,000 households from a large di scount brokerage, we analyze the common stock investments of men and women from February 1991 through January 1997. We document that men trade 45 perc ent more than women. Trading reduces men's net returns by 2.65 percentage p oints a year as opposed to 1.72 percentage points for women.