Risk perception, behavioral bias, and excessive trading: Evidence from investor-level data in China during the COVID-19 pandemic

摘要

To investigate the “excessive trading puzzle”, we develop a structural equation model featuring a moderation effect of risk perception and a mediation effect of behavioral bias. Based on a comprehensive survey conducted in China during the COVID-19 pandemic, we distinguish among four types of behavioral bias: overconfidence, risk-seeking, disposition effect, and sensation-seeking. We find that the moderation effect is consistently present, while the mediation effect is only significant for overconfidence and risk-seeking. The relationships demonstrate spatial heterogeneity and temporal variation, emphasizing the importance of localized and evolving regulations in maintaining financial stability.