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

Paolo Laureti, Peter Ruch, Joseph Wakeling and Yi-Cheng Zhang

Physica A: Statistical Mechanics and its Applications, 2004, vol. 331, issue 3, 651-659

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: Decision theory and game theory; Economics and financial markets; Information theory; Internet experiments (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:331:y:2004:i:3:p:651-659

DOI: 10.1016/j.physa.2003.07.002

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