Markets aren't perfectly efficient. Some trades are dumb. People with lower cognitive ability are more likely to place an order and forget to check fundamentals first, forget to check competitor data, or quiet frankly make whopper mistakes like confusing a ticker symbol. Think of the loons you see on /r/wallstreetbets and other spots. They live on a spectrum, and all of us have bad days.
People with impaired cognitive ability are more likely to make dumb mistakes. That seems pretty obvious to me. The only question is whether or not the effect is large enough to measure using a coarse statistic like this, but that's a quantitative argument.
Yes, but for most dumb trades, there is someone on the other end making a deal. So the 'dumb' trades would have to lean more towards selling rather than buying.
Perhaps pollution just makes one more pessimistic and therefore bearish.
People with impaired cognitive ability are more likely to make dumb mistakes. That seems pretty obvious to me. The only question is whether or not the effect is large enough to measure using a coarse statistic like this, but that's a quantitative argument.