Herding and Contrarianism in a Financial Trading Experiment with Endogenous Timing

Andreas Park and Daniel Sgroi

No 269879, Economic Research Papers from University of Warwick - Department of Economics

Abstract: We undertook the first market trading experiments that allowed heterogeneously informed subjects to trade in endogenous time, collecting over 2000 observed trades. Subjects’ decisions were generally in line with the predictions of exogenous-time financial herding theory when that theory is adjusted to allow rational informational herding and contrarianism. While herding and contrarianism did not arise as frequently as predicted by theory, such behavior occurs in a significantly more pronounced manner than in comparable studies with exogenous timing. Types with extreme information traded earliest. Of those with more moderate information, those with signals conducive to contrarianism traded earlier than those with information conducive to herding.

Keywords: Financial Economics; International Relations/Trade (search for similar items in EconPapers)
Pages: 56
Date: 2008-10-01
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Related works:
Working Paper: Herding and Contrarianism in a Financial Trading Experiment with Endogenous Timing (2008)
Working Paper: Herding and Contrarianism in a Financial Trading Experiment with Endogenous Timing (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:269879

DOI: 10.22004/ag.econ.269879

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