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

Eizo Akiyama, Nobuyuki Hanaki, Ryuichiro Ishikawa

Research output: Contribution to journalArticle

14 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
Externally publishedYes

Fingerprint

Experimental Analysis
Experiments
Experiment
Forecast
Uncertainty
Market
Traders
Trading behavior
Experimental analysis
Market conditions
Strategic uncertainty
Price changes
Market experiments
Asset markets
Fundamental values

Keywords

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

ASJC Scopus subject areas

  • Economics and Econometrics
  • Control and Optimization
  • Applied Mathematics

Cite this

How do experienced traders respond to inflows of inexperienced traders? An experimental analysis. / Akiyama, Eizo; Hanaki, Nobuyuki; Ishikawa, Ryuichiro.

In: Journal of Economic Dynamics and Control, Vol. 45, 2014, p. 1-18.

Research output: Contribution to journalArticle

@article{11e3e890f41b4b48a87023ad5560567d,
title = "How do experienced traders respond to inflows of inexperienced traders? An experimental analysis",
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.",
keywords = "Asset markets, Experience, Experiment, Heterogeneity, Strategic uncertainty",
author = "Eizo Akiyama and Nobuyuki Hanaki and Ryuichiro Ishikawa",
year = "2014",
doi = "10.1016/j.jedc.2014.05.007",
language = "English",
volume = "45",
pages = "1--18",
journal = "Journal of Economic Dynamics and Control",
issn = "0165-1889",
publisher = "Elsevier",

}

TY - JOUR

T1 - How do experienced traders respond to inflows of inexperienced traders? An experimental analysis

AU - Akiyama, Eizo

AU - Hanaki, Nobuyuki

AU - Ishikawa, Ryuichiro

PY - 2014

Y1 - 2014

N2 - 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.

AB - 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.

KW - Asset markets

KW - Experience

KW - Experiment

KW - Heterogeneity

KW - Strategic uncertainty

UR - http://www.scopus.com/inward/record.url?scp=84904862093&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84904862093&partnerID=8YFLogxK

U2 - 10.1016/j.jedc.2014.05.007

DO - 10.1016/j.jedc.2014.05.007

M3 - Article

AN - SCOPUS:84904862093

VL - 45

SP - 1

EP - 18

JO - Journal of Economic Dynamics and Control

JF - Journal of Economic Dynamics and Control

SN - 0165-1889

ER -