We use a laboratory market to investigate the behavior of traders who lack informational advantages and have no exogenous reason to trade. We find that these uninformed traders behave largely as irrational contrarian “noise traders,” trading against recent price movements to their own...

This study conducts a reinforcement learning (RL) experiment to investigate the behavior of noise traders under adverse selection. The experiment applies the concepts of Lo’s (2004) adaptive market hypothesis to limit order markets and offers a rational, adaptive learning-based explanation for...