EconPapers    
Economics at your fingertips  
 

Herd Behavior in a Laboratory Financial Market

Marco Cipriani () and Antonio Guarino ()

Experimental from EconWPA

Abstract: We study herd behavior in a laboratory Þnancial market where a sequence of subjects trades an asset whose value is unknown. In two treatments the price is updated according to a deterministic rule based on the order ßow, and in another it is updated by experimental participants. Theory predicts that agents should never herd. Our experimental results are in line with this prediction. Nevertheless, we observe a phenomenon that cannot be accounted for by the theory. In some cases, subjects decide not to use their private information and choose not to trade. In other cases, they ignore their private information to trade against the market (contrarian behavior). (JEL C92, D8, G14)

JEL-codes: C92 D8 G14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-evo, nep-exp, nep-fin and nep-sea
Date: 2005-02-17
Note: Type of Document - pdf; pages: 30
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (61) Track citations by RSS feed

Downloads: (external link)
http://econwpa.repec.org/eps/exp/papers/0502/0502002.pdf (application/pdf)

Related works:
Journal Article: Herd Behavior in a Laboratory Financial Market (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpex:0502002

Access Statistics for this paper

More papers in Experimental from EconWPA
Series data maintained by EconWPA ().

 
Page updated 2017-06-21
Handle: RePEc:wpa:wuwpex:0502002