How do experienced traders respond to inflows of inexperienced traders? An experimental analysis

Eizo Akiyama (), Nobuyuki Hanaki and Ryuichiro Ishikawa
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Eizo Akiyama: Faculty of Engineering, Information and Systems [Tsukuba] - Université de Tsukuba = University of Tsukuba

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Abstract: We conducted asset market experiments where one experienced subject interacts with five inexperienced subjects to investigate how experienced subjects change their price forecasts and trading behavior when faced with strategic uncertainty caused by inflows of inexperienced subjects. Only half the experienced subjects initially forecasted prices deviating more from the fundamental values in the market with five inexperienced subjects than in the final round of the experiment in which they had previously participated. Furthermore, the majority of our experienced subjects did not change their trading behavior. Many experienced subjects act as price stabilizers when the inflow of inexperienced subjects is not associated with other changes in market conditions.

Keywords: Asset markets; Experience; Experiment; heterogeneity; Strategic uncertainty (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (42)

Published in Journal of Economic Dynamics and Control, 2014, 45 (C), pp.1-18. ⟨10.1016/j.jedc.2014.05.007⟩

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Related works:
Journal Article: How do experienced traders respond to inflows of inexperienced traders? An experimental analysis (2014)
Working Paper: How Do Experienced Traders Respond to Inflows of Inexperienced Traders? An Experimental Analysis (2013)
Working Paper: How Do Experienced Traders Respond to Inflows of Inexperienced Traders? An Experimental Analysis (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01463903

DOI: 10.1016/j.jedc.2014.05.007

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