Using experimental asset markets, we study the situation of a financial analyst who is trying to infer the fundamental value of an asset by observing the market's history. We find that such capacity requires both standard cognitive skills (IQ) as well as social and emotional skills. However,...

We develop a novel experimental paradigm to study the causal impact of trading algorithms on informational efficiency, liquidity, and welfare. In our design, public information about the asset value is revealed during trading, which gives algorithms a reaction speed advantage. We distinguish...

We utilize laboratory experiments to pinpoint three drivers of trader performance: fluid intelligence, cognitive reflection and theory of mind. Fluid intelligence provides traders with computational skills necessary to undertake statistical inference. Cognitive reflection helps traders avoid...

Using simulations and experiments, we pinpoint two main drivers of trader performance: cognitive reflection and theory of mind. Both dimensions facilitate traders' learning about asset valuation. Cognitive reflection helps traders use market signals to update their beliefs whereas theory of mind...