Whose Disagreement Matters? Household Belief Dispersion and Stock Trading Volume

Abstract Theoretical models have long recognized the role of investor disagreements in marketplace, but little evidence is documented regarding how belief dispersion affects trading activities broad equity market. Using over three decades data from a survey US households, we introduced novel measure household macroeconomic and document its positive relationship with market-wide stock volume, even after controlling for an array professional analysts’ dispersion. Results are more pronounced among households who likely to own stocks. Furthermore, show that priced cross-section returns, whereas analysts not.