Herding and Contrarian Behavior in Financial Markets: An Experimental Analysis

Andreas Park and Daniel Sgroi

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: We are the first paper to analyze and confirm the existence and extent of rational informational herding and rational informational contrarianism in a financial market experiment, and to compare and contrast these with the equivalent irrational phenomena. In our study, subjects generally behave according to benchmark rationality. Traders who should herd or be contrarian in theory are the significant source of both within the data. Correcting for subjects who chose not to trade at least once (an irrational action in itself), increases our ability to predict herding or contrarian behavior considerabl.

Keywords: Herding; Contrarianism; Informational Efficiency; Experiments (search for similar items in EconPapers)
JEL-codes: C91 D82 G14 (search for similar items in EconPapers)
Date: 2009-10-12
New Economics Papers: this item is included in nep-cbe and nep-exp
References: Add references at CitEc
Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Herding and Contrarian Behavior in Financial Markets: An Experimental Analysis (2016)
Working Paper: Herding and Contrarian Behavior in Financial Markets - An Experimental Analysis (2016)
Working Paper: Herding and Contrarian Behavior in Financial Markets: An Experimental Analysis (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0938

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