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Herd behavior and mood: An experimental study on the forecasting of share prices

Ibrahim Filiz, Thomas Nahmer and Markus Spiwoks

Journal of Behavioral and Experimental Finance, 2019, vol. 24, issue C

Abstract: This experimental study examines the influence of emotions on the tendency towards herd behavior. The subjects forecast share prices, and while doing so they are offered the chance to orientate themselves towards other subjects and to possibly exhibit herding behavior. In a between-subjects design, three treatments are used (neutral, positive and negative mood). Mood is influenced by means of film excerpts which are shown to the subjects. It is shown that mood really does have an influence on the tendency towards herding behavior. A neutral mood in particular favors a tendency towards herd behavior.

Keywords: Share price forecasts; Herding behavior; Emotions; Behavioral finance; Experiments (search for similar items in EconPapers)
JEL-codes: D83 D91 G12 G17 G41 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.jbef.2019.07.004

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Journal of Behavioral and Experimental Finance is currently edited by Michael Dowling and Jürgen Huber

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