From Gambling to Gaming: The Crowding Out Effect

Shubo Kou and Xiyuan Ma

Finance Research Letters, 2024, vol. 59, issue C

Abstract: This paper investigates how noise trading behavior is influenced by limited attention. As the daily price limit rules of the Chinese stock market provide a scenario for the exhibition of salient payoffs, speculators elevate prices to attract noise traders into the market. Utilizing a series of distraction events stemming from mobile games as exogenous shocks, we obtain statistical evidence that the gambler-like behavior, termed as “Hitting game” may be crowded out. Consistent with our attention mechanism, indicators such as trading volume decline in response to these game shocks.

Keywords: Salience theory; Noise trader; Limited attention (search for similar items in EconPapers)
JEL-codes: G12 G40 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:59:y:2024:i:c:s1544612323011637

DOI: 10.1016/j.frl.2023.104791

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