This result suggests that not only are investors too willing to act on too little information, but they are too willing to act when they are wrong. These studies demonstrate that investors trade too much and to their detriment. While both men and women exhibit overconfidence, psychologists find that men are generally more overconfident than women. Gender differences in overconfidence are highly task dependent. Several studies confirm that differences in confidence are greatest for tasks perceived to be in the masculine domain.
Men are inclined to feel more competent than women do in financial matters.
Indeed, casual observation reveals that men are disproportionately represented in the financial industry. To test these hypotheses, we partition a data set of position and trading records for over 35,000 households at a large discount brokerage firm into accounts opened by men and accounts opened by women. Consistent with the predictions of the overconfidence models, we find that the average turnover rate of common stocks for men is nearly one and a half times that for women. After a reasonable accounting for transaction costs, the average annual risk-adjusted net return earned by men is 1.4 percent less than that earned by women. The differences in turnover and return performance are even more pronounced between single men and single women.