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Do Dual Discounting Equations Reconcile Exponential Banks with Their Hyperbolic Customers?
Osborne, Michael - 2020
.This article queries past experimental results by examining the underlying theory using the concept of duality. Two dual …
Persistent link: https://www.econbiz.de/10012834166
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New Evolutionary Finance : Social Transmission Bias and Cultural Evolution in Financial Markets
Akcay, Erol - 2020
The thoughts and behaviors of financial market participants depend upon adopted cultural traits, including information signals, beliefs, strategies, and folk economic models. Financial traits compete to survive in the human population, and are modified in the process of being transmitted from...
Persistent link: https://www.econbiz.de/10012825186
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Correlated Observations, the Law of Small Numbers and Bank Runs
Horvath, Gergely - 2014
Empirical descriptions and studies suggest that generally depositors observe a sample of previous decisions before deciding if to keep their funds deposited or to withdraw them. These observed decisions may exhibit different degrees of correlation across depositors. In our model depositors are...
Persistent link: https://www.econbiz.de/10013044218
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Probability of Winning in Risky Choices
Chaudhary, Vikas - 2021
Media reports say that high earners and syndicates buy lottery tickets in bulk. Experimental evidence shows that agents aggressively bid in auctions and contests. Do people try to trade-off the probability of winning with other basic risk dimensions (for example, cost) to achieve a subjective...
Persistent link: https://www.econbiz.de/10013323549
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Mental Capabilities, Heterogeneous Trading Patterns and Performance in an Experimental Asset Market
Hefti, Andreas - 2018
We develop and test a framework of mental information representation in an asset market setting. The model predicts heterogeneous trading behavior as a consequence of two distinct mental capabilities: analytical skills and mentalizing, where the former involves quantitative, objective aspects of...
Persistent link: https://www.econbiz.de/10012935621
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Compensation schemes, liquidity provision, and asset prices : an experimental analysis
Baghestanian, Sascha; Gortner, Paul; Massenot, Baptiste - 2015
In an experimental setting in which investors can entrust their money to traders, we investigate how compensation schemes affect liquidity provision and asset prices. Investors face a trade-off between risk and return. At the benefit of a potentially higher return, they can entrust their money...
Persistent link: https://www.econbiz.de/10010530580
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Thar she blows again : reducing anchoring rekindles bubbles
Baghestanian, Sascha; Walker, Todd B. - 2014
We investigate the relationship between anchoring and the emergence of bubbles in experimental asset markets. We show that setting a visual anchor at the fundamental value (FV) in the first period only is sufficient to eliminate or to significantly reduce bubbles in laboratory asset markets. If...
Persistent link: https://www.econbiz.de/10010365125
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Social Status and Risk-Taking in Investment Decisions
Lindner, Florian - 2019
A pervasive feature in the finance industry is relative performance, which can include extrinsic (money), intrinsic (self-image), and reputational (status) motives. In this paper, we model a portfolio decision with two assets and investigate how reputational motives (i.e., the public...
Persistent link: https://www.econbiz.de/10012871244
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Belief in Mean Reversion and the Disposition Effect : An Experimental Test
Jiao, Peiran - 2016
. This experiment evaluates its two competing behavioral mechanisms: belief in mean reversion and prospect theory. The …-one percent of them exhibited significant disposition effect. I elicited the participants' prospect theory parameters and beliefs … about price movements, and found that beliefs especially in the loss domain, not prospect theory, significantly contribute …
Persistent link: https://www.econbiz.de/10013005143
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Biased By Choice : How Financial Constraints Can Reduce Financial Mistakes
Heimer, Rawley - 2020
We show that constraints can improve financial decision-making by disciplining behavioral biases. In financial markets, restrictions on leverage limit traders' ability to borrow to open new positions. We demonstrate that regulation which restricts the provision of leverage to retail traders...
Persistent link: https://www.econbiz.de/10012850657