The Interactive Minority Game: a Web based investigation of human market interactions

Paolo Laureti, Peter Ruch, Joseph Wakeling and Yi-Cheng Zhang
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Peter Ruch: Fribourg University, Switzerland
Joseph Wakeling: Fribourg University, Switzerland
Yi-Cheng Zhang: Fribourg University, Switzerland

Experimental from EconWPA

Abstract: The unprecedented access offered by the World Wide Web brings with it the potential to gather huge amounts of data on human activities. Here we exploit this by using a toy model of financial markets, the Minority Game (MG), to investigate human speculative trading behaviour and information capacity. Hundreds of individuals have played a total of tens of thousands of game turns against computer-controlled agents in the Web-based Interactive Minority Game. The analytical understanding of the MG permits fine-tuning of the market situations encountered, allowing for investigation of human behaviour in a variety of controlled environments. In particular, our results indicate a transition in players' decision-making, as the markets become more difficult, between deductive behaviour making use of short-term trends in the market, and highly repetitive behaviour that ignores entirely the market history, yet outperforms random decision-making.

Keywords: Experimental economics and financial markets; Decision theory and game theory; Information theory (search for similar items in EconPapers)
JEL-codes: G14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe and nep-exp
Date: 2004-02-23
Note: Type of Document - pdf; prepared on WinXP; pages: 13; figures: 5
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpex:0402004

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