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From Gambling to Gaming: The Crowding Out Effect

Author

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  • Kou, Shubo
  • Ma, Xiyuan

Abstract

This paper investigates how noise trading behavior is influenced by limited attention. As the daily price limit rules of the Chinese stock market provide a scenario for the exhibition of salient payoffs, speculators elevate prices to attract noise traders into the market. Utilizing a series of distraction events stemming from mobile games as exogenous shocks, we obtain statistical evidence that the gambler-like behavior, termed as “Hitting game” may be crowded out. Consistent with our attention mechanism, indicators such as trading volume decline in response to these game shocks.

Suggested Citation

  • Kou, Shubo & Ma, Xiyuan, 2024. "From Gambling to Gaming: The Crowding Out Effect," Finance Research Letters, Elsevier, vol. 59(C).
    • Handle: RePEc:eee:finlet:v:59:y:2024:i:c:s1544612323011637
    DOI: 10.1016/j.frl.2023.104791
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    More about this item

    Keywords

    Salience theory; Noise trader; Limited attention;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G40 - Financial Economics - - Behavioral Finance - - - General

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