Smoking hot portfolios? Trading behavior, investment biases, and self-control failure

Charline Uhr, Steffen Meyer, Andreas Hackethal

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Self-control is a personality trait that explains undersaving and nonparticipation decisions. We show that self-control failure also affects trading behavior among individuals on capital markets. We use smoking as the most socially accepted example of self-control failure among 13,644 German brokerage clients and compare the trading behavior of 3,553 smokers and 10,091 nonsmokers. Smokers are associated with a higher portfolio turnover unexplained by financial sophistication or wealth effects. Self-control failure also exacerbates overconfidence, social contagion, sensation seeking, and attention grabbing. Overall, self-control failure is costly because it increases the gap between gross and net returns of smokers relative to nonsmokers.
Original languageEnglish
JournalJournal of Empirical Finance
Pages (from-to)73-95
Publication statusPublished - Sept 2021


  • Individual investor
  • Investment biases
  • Overtrading
  • Self-control
  • Trading behavior


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