Algorithmic vs. Human Portfolio Choice

Key Points

• To compare the effectiveness of algorithmic trading versus human decision-making in portfolio selection.
• Randomized trial design comparing algorithmic and human portfolio choices.
• Evaluation of investment outcomes across different market conditions.
• Algorithmic portfolios showed a higher average return of 5.2% compared to 3.1% for human-managed portfolios, P<0.05.
• The volatility of algorithmic portfolios was less, with a standard deviation of 2.3% versus 4.5% for human portfolios.