Herding and Contrarian Behavior in Financial Markets: An Internet Experiment
We report results of an Internet experiment designed to test the theory of informational cascades in financial markets (Christopher Avery and Peter Zemsky, 1998). More than 6,400 subjects, including a subsample of 267 consultants from an international consulting firm, participated in the experiment....
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| Veröffentlicht in: | The American economic review 2005-12, Vol.95 (5), p.1403-1426 |
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| container_title | The American economic review |
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| creator | Drehmann, Mathias Oechssler, Jörg Roider, Andreas |
| description | We report results of an Internet experiment designed to test the theory of informational cascades in financial markets (Christopher Avery and Peter Zemsky, 1998). More than 6,400 subjects, including a subsample of 267 consultants from an international consulting firm, participated in the experiment. We find that the presence of a flexible market price prevents herding. The presence of contrarian behavior distorts prices, however, and even after 20 decisions, convergence to the fundamental value is rare. We also report some interesting differences with respect to subjects' fields of study. Reassuringly, the behavior of the consultants turns out to be not significantly different from that of the remaining subjects. |
| doi_str_mv | 10.1257/000282805775014317 |
| format | Article |
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| source | Jstor Complete Legacy; American Economic Association Web; EBSCOhost Business Source Complete |
| subjects | A priori knowledge Behavior Capital market Consulting firms Contrarian investing Design Economic models Experiments Field work Financial economics Financial markets Financial models Financial research Herd behavior Herding Impact analysis Internet Investment advisors Investment policy Investors Lotteries Market prices Mass behaviour Physics Pricing Rationality Securities markets Statistical analysis Stock exchange Studies Theory |
| title | Herding and Contrarian Behavior in Financial Markets: An Internet Experiment |
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