Chmura, Thorsten, Le, Hang and Nguyen, Kim (2022) Herding with leading traders: Evidence from a laboratory social trading platform. Journal of Economic Behavior and Organization, 203 . pp. 93-106. ISSN 1672681
Full content URL: https://doi.org/10.1016/j.jebo.2022.08.035
Documents |
|
|
![]() |
PDF
University repositories_Manuscript.pdf - Whole Document Restricted to Repository staff only until 16 March 2024. Available under License Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International. 562kB | |
|
PDF
1-s2.0-S016726812200316X-main.pdf - Whole Document Available under License Creative Commons Attribution 4.0 International. 899kB |
Item Type: | Article |
---|---|
Item Status: | Live Archive |
Abstract
We provide novel evidence about herd behavior and its impact on asset price bubbles in an experimental financial market. We find that traders imitate quotes of those with the highest wealth increases as ranked on the leader-boards, despite that no traders possess private value-related information and that wealth increases are not due to trading skills. Most remarkably, we find that herd behavior does not produce more price bubbles and the awareness of information asymmetry leads to fewer bubbles as risk-averse traders become more cautious and do not quote prices too far from the fundamental value. We also find that participants with financial training have a lower herding tendency and markets with these participants exhibit less mispricing.
Keywords: | Herd behavior, Asset market, Information asymmetry, Bubbles, Leader-board, Financial training |
---|---|
Subjects: | N Business and Administrative studies > N300 Finance N Business and Administrative studies > N321 Investment L Social studies > L111 Financial Economics |
Divisions: | Lincoln International Business School |
ID Code: | 50644 |
Deposited On: | 14 Sep 2022 09:32 |
Repository Staff Only: item control page