Trading fast and slow: The role of deliberation in experimental financial markets

Giovanni Ferri, Matteo Ploner and Matteo Rizzolli

Journal of Behavioral and Experimental Finance, 2021, vol. 32, issue C

Abstract: Financial bubbles cause misallocation of resources and even systemic crises. Experimental finance has long studied both the determinants of bubbles and institutional measures to prevent them. Within the framework of the dual-process theory, we experimentally investigate whether traders under higher time pressure (Fast condition) behave differently than traders under lower time pressure (Slow condition). Relative to the Fast condition, the Slow condition dampens market price volatility, dramatically reduces the spread between ask and bid limit orders, and leads to higher equality in payoffs.

Keywords: Rational vs. emotional choice; Dual-process theory; Financial bubbles; Experimental and behavioral finance (search for similar items in EconPapers)
JEL-codes: C92 D63 G12 G41 M14 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:32:y:2021:i:c:s2214635021001374

DOI: 10.1016/j.jbef.2021.100593

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