Selling Fast and Buying Slow: Heuristics and Trading Performance of Institutional Investors

Paper: SSRN 3893357

Abstract

Are market experts prone to heuristics, and if so, do they transfer across closely related domains—buying and selling? We investigate this question using a uniq

Complexity vs Empirical Score

• Math Complexity: 3.5/10
• Empirical Rigor: 8.0/10
• Quadrant: Street Traders — practical and empirical, lighter on theory

Why this score: The paper employs advanced statistical analysis on a large, unique dataset of institutional trades, focusing on empirical performance metrics and counterfactuals. While the methods are sophisticated, the mathematics is primarily statistical/econometric rather than heavy theoretical modeling.

Research Flowchart

  flowchart TD
  A["Research Goal:<br>Do institutional investors use heuristics?<br>Are they consistent in buying vs selling?"] --> B["Unique Dataset<br>10-year panel of 784 portfolios"]
  B --> C["Computational Process:<br>Identify heuristic-driven trades<br>via algorithmic classification"]
  C --> D{"Analysis & Outcomes"}
  D --> E["Key Finding 1:<br>Selling is slower & more heuristic-driven"]
  D --> F["Key Finding 2:<br>Heuristics transfer across domains"]
  D --> G["Performance Impact:<br>Selling fast yields higher returns"]