Download or read book Vividness and Trading Behavior in an Experimental Asset Market written by Sudeep Ghosh and published by . This book was released on 2013 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the impact of vividness on trading behavior in an experimental asset market, by contrasting vivid with pallid presentation of information. Vivid information is characterized as emotionally engaging and proximate, while pallid information is purely factual. Our design enables us to isolate the effect of vividness by controlling the content of the information irrespective of the presentation. We find that vividness elevates investor attention, as measured through order-book composition and market variables. Interestingly, vividness can both distract as well as focus investors' attention depending on the nature of the underlying information. We also find evidence that vividness has a catalyzing effect on existing behavioral biases. Independent of information content, vividness exacerbates difference of opinion amongst investors with heterogeneous priors. In addition, we find that strong market sentiment develops when a large proportion of overconfident investors receive prior-confirming information in a vivid manner. This results in the concurrence of high sentiment, returns and turnover.
Download or read book Mental Capabilities Heterogeneous Trading Patterns and Performance in an Experimental Asset Market written by Andreas Hefti and published by . This book was released on 2018 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop and test a framework of mental information representation in an asset market setting. The model predicts heterogeneous trading behavior as a consequence of two distinct mental capabilities: analytical skills and mentalizing, where the former involves quantitative, objective aspects of a decision problem, and the latter an accurate assessment of others' behavior and intentions. Individual differences in capabilities induce specific, differential trading patterns and performances, despite the availability of identical information. The most successful traders are strong in both capabilities, while the general relation between success and mental capabilities is non-monotone. The experimental data strongly supports the theoretical conjectures.
Download or read book Mind Body Bubble Psychological and Biophysical Dimensions of Behavior in Experimental Asset Markets written by David Butler and published by . This book was released on 2018 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: Asset market bubbles and crashes are a major source of economic instability and inefficiency. Sometimes ascribed to animal spirits or irrational exuberance, their source remains imperfectly understood. Experimental methods can isolate systematic deviations from an asset's fundamental value in a manner not possible on the trading floor. In this chapter, we review evidence from dozens of laboratory experiments that investigate the measurement and manipulation of an array of psychological and biophysical attributes. Measures of emotion self-regulation and interoceptive ability are informative, as is cognitive ability and the level and fluctuation of hormones.Rules that promote deliberative decision making can improve market efficiency, while incidental emotions can impair it. Signals in specific brain areas can be a trigger precipitating a bubble's collapse. We conclude that trading decisions are profoundly biophysical in a manner not captured by efficient markets models, and close with speculations on implications for algorithmic trading.
Download or read book Bubbles and Crashes in Experimental Asset Markets written by Stefan Palan and published by . This book was released on 2009-10-02 with total page 188 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book describes a laboratory experiment designed to test the causes and properties of bubbles in financial markets and explores the question whether it is possible to design markets which avoid such bubbles and crashes. In the experiment, subjects were given the opportunity to trade in a stock market modeled after the seminal work of Smith et al. (1988). To account for the increasing importance of online betting sites, subjects were also allowed to trade in a digital option market. The outcomes shed new light on how subjects form and update their expectations, placing special emphasis on the bounded rationality of investors. Various analytical bubble measures found in the literature are collected, calculated, classified and presented for the first time. The very interesting new bubble measures "Dispersion Ratio", "Overpriced Transactions" and "Underpriced Transactions" are developed, making the book an important step towards the research goal of preventing bubbles and crashes in financial markets. In addition, the book formulates concrete new research hypotheses for future studies.
Download or read book Personal Traits and Trading in an Experimental Asset Market written by Tomáš Miklánek and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Before and After written by Binglin Gong and published by . This book was released on 2014 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt: We report the results of an experiment designed to study whether or not having experienced booms and crashes in naturally occurring asset markets affects subjects' trading behavior in the lab. Active investors in the Shanghai Stock Exchange were recruited to participate in either the Boom treatment, conducted in June 2007 after the Shanghai Stock Exchange had had a bull market for almost 2 years, or the Crash treatment, conducted in August 2008 after the SSE composite index had plummeted almost 60% from its high reached in October 2007. We find that, compared to those in the Crash treatment, subjects in the Boom treatment were much more active when participating in our experimental asset markets in that they tended to made bigger trades and preferred to hold more shares than cash. These behavioral differences cannot be explained by the overconfidence hypothesis.
Download or read book The Bull of Wall Street written by Amos Nadler and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Psychology of Successful Trading written by Tim Short and published by Routledge. This book was released on 2017-11-22 with total page 371 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is the first to demonstrate the practical implications of an important, yet under-considered area of psychology in helping traders and investors understand the biases and attribution errors that drive unpredictable behaviour on the trading floor. Readers will improve their chances of trading successfully by learning where cognitive biases lead to errors in stock analysis and how these biases can be used to predict behavior in market participants. Focusing on the three major types of bias—Belief-Formation, Quasi-Economic, and Social—the book provides a rigorous discussion of the literature before explaining how each of these biases plays out in financial markets. The author brings together the fields of philosophical psychology and behavioral finance to introduce "theory of mind," providing readers with tools to predict biases in others as well as using these predictions to form optimal trading strategies for themselves. Readers will also learn to understand their own behaviors, counteracting biases such as overconfidence and conformity—and the "curse" of their own knowledge—to strengthen trade performance. Pairing his skill and experience with an extensive research bibliography, Short positions the foundational sources of cognitive biases alongside concrete examples, experimental designs, and trader’s anecdotes, helping readers to apply theoretical guidelines to real-life scenarios. Shrewd professionals and MBA students will benefit from The Psychology of Successful Trading’s intuitive structure and practical focus.
Download or read book Emotion Volatility Trading Behavior and Market Reaction written by Shu Lin and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Emotion is always important, although many factors are used to explain the up and drop of capital market. Through psychological experiment, we could search the pure relation between emotion and trading behavior, controlling and removing other factors, and the results tell us about the origin of emotion volatility and effect of emotion on trading behavior and wealth. In pure experimental market, emotion volatility, wealth and asset price are mainly determined by fundamental information. Besides, different affects will influence trading behavior, and accelerate the asset price change potentially. This Experiment directly provide psychological evidence to behavioral asset pricing theory.
Download or read book Experimental Asset Markets written by Owen Powell and published by . This book was released on 2015 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews new research on experimental asset markets, markets in which the value of the traded asset is homogeneous across all agents. Such markets have been shown to be prone to substantial mispricing, usually in the form of a bubble-and-crash pattern. This calls into question the efficiency of such markets. The studies reviewed consider how market efficiency is affected by the characteristics of traders (intelligence, knowledge, etc.), the properties of the traded asset (the time path of fundamental value, information provision, etc.), and the structure of the market (market interventions, compensation schemes, etc.). Finally, the paper summarizes with a discussion related to defining a unique measure of mispricing.
Download or read book Immediate Disclosure Or Secrecy written by Lucy F. Ackert and published by . This book was released on 2001 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Informational Efficiency of Experimental Asset Markets written by Daniel Friedman and published by London : Department of Economics, University of Western Ontario. This book was released on 1983 with total page 96 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Trading on Sentiment written by Richard L. Peterson and published by John Wiley & Sons. This book was released on 2016-03-21 with total page 374 pages. Available in PDF, EPUB and Kindle. Book excerpt: In his debut book on trading psychology, Inside the Investor’s Brain, Richard Peterson demonstrated how managing emotions helps top investors outperform. Now, in Trading on Sentiment, he takes you inside the science of crowd psychology and demonstrates that not only do price patterns exist, but the most predictable ones are rooted in our shared human nature. Peterson’s team developed text analysis engines to mine data - topics, beliefs, and emotions - from social media. Based on that data, they put together a market-neutral social media-based hedge fund that beat the S&P 500 by more than twenty-four percent—through the 2008 financial crisis. In this groundbreaking guide, he shows you how they did it and why it worked. Applying algorithms to social media data opened up an unprecedented world of insight into the elusive patterns of investor sentiment driving repeating market moves. Inside, you gain a privileged look at the media content that moves investors, along with time-tested techniques to make the smart moves—even when it doesn’t feel right. This book digs underneath technicals and fundamentals to explain the primary mover of market prices - the global information flow and how investors react to it. It provides the expert guidance you need to develop a competitive edge, manage risk, and overcome our sometimes-flawed human nature. Learn how traders are using sentiment analysis and statistical tools to extract value from media data in order to: Foresee important price moves using an understanding of how investors process news. Make more profitable investment decisions by identifying when prices are trending, when trends are turning, and when sharp market moves are likely to reverse. Use media sentiment to improve value and momentum investing returns. Avoid the pitfalls of unique price patterns found in commodities, currencies, and during speculative bubbles Trading on Sentiment deepens your understanding of markets and supplies you with the tools and techniques to beat global markets— whether they’re going up, down, or sideways.
Download or read book The Effect of Forecast Bias on Market Behavior written by Lucy F. Ackert and published by . This book was released on 1999 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Trading Institutions in Experimental Asset Markets written by Bulent Guler and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Heterogeneity of Beliefs and Trade in Experimental Asset Markets written by Tim A. Carle and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Partial Revelation of Information in Experimental Asset Markets written by Daniel Friedman and published by . This book was released on 1988 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt:
