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The Interactive Minority Game: a Web based investigation of human market interactions

Author

Listed:
  • Paolo Laureti

    (Fribourg University, Switzerland)

  • Peter Ruch

    (Fribourg University, Switzerland)

  • Joseph Wakeling

    (Fribourg University, Switzerland)

  • Yi-Cheng Zhang

    (Fribourg University, Switzerland)

Abstract

The unprecedented access offered by the World Wide Web brings with it the potential to gather huge amounts of data on human activities. Here we exploit this by using a toy model of financial markets, the Minority Game (MG), to investigate human speculative trading behaviour and information capacity. Hundreds of individuals have played a total of tens of thousands of game turns against computer-controlled agents in the Web-based Interactive Minority Game. The analytical understanding of the MG permits fine-tuning of the market situations encountered, allowing for investigation of human behaviour in a variety of controlled environments. In particular, our results indicate a transition in players' decision-making, as the markets become more difficult, between deductive behaviour making use of short-term trends in the market, and highly repetitive behaviour that ignores entirely the market history, yet outperforms random decision-making.

Suggested Citation

  • Paolo Laureti & Peter Ruch & Joseph Wakeling & Yi-Cheng Zhang, 2004. "The Interactive Minority Game: a Web based investigation of human market interactions," Experimental 0402004, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpex:0402004
    Note: Type of Document - pdf; prepared on WinXP; pages: 13; figures: 5
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/exp/papers/0402/0402004.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

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    3. Chenge Zhu & Guang Yang & Kenan An & Jiping Huang, 2014. "The Leverage Effect on Wealth Distribution in a Controllable Laboratory Stock Market," PLOS ONE, Public Library of Science, vol. 9(6), pages 1-10, June.

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    More about this item

    Keywords

    Experimental economics and financial markets; Decision theory and game theory; Information theory;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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