This paper examines whether socio-economic and psychological factors which are known to influence lottery purchases lead to excess investment in lottery-type stocks. The results in-dicate that, unlike institutional investors, individual investors prefer stocks with lottery-type features. The demand for lottery-type stocks increases during bad economic times and such demand shifts influence the returns of lottery-type stocks. In the cross-section, factors which induce greater expenditure in lotteries also induce greater investment in lottery-type stocks –poor, young men who live in urban, Republican dominated regions and belong to specific mi- nority (African-American and Hispanic) and religious (Catholic) groups invest more in lottery-type stocks. Additionally, investors who exhibit stronger preference for lottery-type stocks experience greater mean under-performance. Collectively, the evidence indicates that people’s attitudes toward gambling are reflected in their stock investment choices and stock returns.
Who Gambles in the Stock Market pdf download
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