The Influence of Psychotropic Drugs on Investor Overconfidence

Abstract

We study the effects of the self-reported intake of stimulants, depressants and hallucinogens on investor overconfidence.A total of 105 investors participated.We find that the frequency of drug use did not affect overconfidence.However, overconfidence was correlated with the use of psychotropic drugs in our sample; regardless of type, we find a positive correlation of 15 percent.Correlation of investor overconfidence with stimulants in particular was even stronger at 41 percent.We suggest that identifying the ways psychotropic drugs in general, and stimulants in particular, interfere with striatum activity, is key for understanding their effects on investor overconfidence.

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