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

Eizo Akiyama, Nobuyuki Hanaki, Ryuichiro Ishikawa

Research output: Contribution to journalArticle

16 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)1-18
Number of pages18
JournalJournal of Economic Dynamics and Control
Volume45
DOIs
Publication statusPublished - 2014 Aug

Keywords

  • Asset markets
  • Experience
  • Experiment
  • Heterogeneity
  • Strategic uncertainty

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics

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