Herding, Contrarianism and Delay in Financial Market Trading

Andreas Park and Daniel Sgroi

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Herding and contrarian behavior are often-cited features of real-world financial markets. Theoretical models of continuous trading that study herding and contrarianism, however, usually do not allow traders to choose when to trade or to trade more than once. We present a large-scale experiment to explore these features within a tightly controlled laboratory environment. Herding and contrarianism are significantly more pronounced than in compa- rable studies that do not allow traders to time their decisions. Traders with extreme information tend to trade earliest, followed by those with information conducive to contrarianism, while those with the theoretical potential to herd delay the most.

Keywords: Herding; Contrarianism; Endogenous-time Trading; Experiments (search for similar items in EconPapers)
JEL-codes: C91 D82 G14 (search for similar items in EconPapers)
Date: 2009-10-12
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-fmk and nep-mst
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://files.econ.cam.ac.uk/repec/cam/pdf/cwpe0941.pdf

Related works:
Journal Article: Herding, contrarianism and delay in financial market trading (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0941

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().