 Thou shalt not trade—An analysis of the violations of no-trade predictions in experimental asset marketsDaniel Kleinlercher and Thomas Stöckl Journal of Behavioral and Experimental Finance, 2021, vol. 32, issue C Abstract: In several studies on asset markets in a laboratory environment, observed trading activity is inconsistent with theoretical no-trade predictions. In a series of treatments, we systematically analyze violations and violators of the no-trade prediction and find that there are fewer violations with the manipulations but the trading activity does not cease completely. Three observations further contribute to a better understanding of this residual trading activity. First, traders exploit all available profitable trading opportunities even when transactions offer only a small profit. Second, unprofitable trades are significantly more concentrated among a few subjects than profitable trades, implying that only a minority is responsible for the observed trading activity. Third, a better understanding of the market mechanism significantly affects traders’ ability to generate profitable trades. In sum, these results strengthen the confidence in the well-functioning of laboratory asset markets. Keywords: Experimental finance; No-trade theorem; Asset market; Trading activity (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:32:y:2021:i:c:s2214635021001349 DOI: 10.1016/j.jbef.2021.100590 Access Statistics for this article Journal of Behavioral and Experimental Finance is currently edited by Michael Dowling and Jürgen Huber More articles in Journal of Behavioral and Experimental Finance from Elsevier |
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