Emotions in hybrid financial markets

Lorenzo Cominelli, Gianluca Rho, Caterina Giannetti, Federico Cozzi, Alberto Greco, Graziano A. Manduzio, Philipp Chapkovski, Michalis Drouvelis and Enzo Pasquale Scilingo

Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy

Abstract: We investigate whether human traders experience milder emotions when participating in a financial market populated by artificial agents as opposed to a market comprising solely humans. In particular, by manipulating across conditions the number of artificial players, we assess how much emotions vary along with price dynamics (i.e. the occurrence of price bubbles). Notably, to ensure robustness, we evaluate emotions using three distinct methods: self-reporting, physiological responses, and facial expressions. Results show larger bubbles and milder emotional reactions in conditions with a higher count of artificial agents. Furthermore, negative emotions indirectly contribute to the mitigation of price bubbles. Ultimately, we observe a moderate degree of consistency across emotional measurements, with self-reported data being the least consistent among them.

Keywords: Emotions; Financial Bubbles; Artificial Players (search for similar items in EconPapers)
JEL-codes: G10 G41 (search for similar items in EconPapers)
Date: 2024-09-01
New Economics Papers: this item is included in nep-fmk
Note: ISSN 2039-1854
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Persistent link: https://EconPapers.repec.org/RePEc:pie:dsedps:2024/311

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