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Herding with leading traders: Evidence from a laboratory social trading platform

Chmura, Thorsten; Le, Hang; Nguyen, Kim


Thorsten Chmura

Associate Professor

Kim Nguyen


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and the awareness of information asymmetry leads to fewer bubbles as risk-averse traders become more cautious and do not quote prices too far from the fundamental value.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.


Chmura, T., Le, H., & Nguyen, K. (2022). Herding with leading traders: Evidence from a laboratory social trading platform. Journal of Economic Behavior and Organization, 203, 93-106.

Journal Article Type Article
Acceptance Date Aug 30, 2022
Online Publication Date Sep 16, 2022
Publication Date 2022-11
Deposit Date Nov 16, 2022
Publicly Available Date Nov 18, 2022
Journal Journal of Economic Behavior & Organization
Electronic ISSN 2328-7616
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 203
Pages 93-106
Public URL
Publisher URL


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