Information Cascades: Evidence from a Field Experiment with Financial Market Professionals

Jonathan E. Alevy (), Michael S. Haigh and John List ()

Journal of Finance, 2007, vol. 62, issue 1, pages 151-180

Abstract: Previous empirical studies of information cascades use either naturally occurring data or laboratory experiments. We combine attractive elements from each of these lines of research by observing market professionals from the Chicago Board of Trade (CBOT) in a controlled environment. Analysis of over 1,500 individual decisions suggests that CBOT professionals behave differently from our student control group. For instance, professionals are better able to discern the quality of public signals and their decisions are not affected by the domain of earnings. These results have implications for market efficiency and are important in both a positive and normative sense. Copyright 2007 by The American Finance Association.

Date: 2007
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Working Paper: INFORMATION CASCADES: EVIDENCE FROM A FIELD EXPERIMENT WITH FINANCIAL MARKET PROFESSIONALS (2003)
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