Thorsten Chmura
Herding with leading traders: Evidence from a laboratory social trading platform
Chmura, Thorsten; Le, Hang; Nguyen, Kim
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and the awareness of information asymmetry leads to fewer bubbles as risk-averse traders become more cautious and do not quote prices too far from the fundamental value.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.
Citation
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. https://doi.org/10.1016/j.jebo.2022.08.035
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 | 0167-2681 |
Publisher | Elsevier |
Peer Reviewed | Peer Reviewed |
Volume | 203 |
Pages | 93-106 |
DOI | https://doi.org/10.1016/j.jebo.2022.08.035 |
Public URL | https://nottingham-repository.worktribe.com/output/13746818 |
Publisher URL | https://www.sciencedirect.com/science/article/pii/S016726812200316X |
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Publisher Licence URL
https://creativecommons.org/licenses/by/4.0/
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