Paolo Laureti (Fribourg University, Switzerland) Peter Ruch (Fribourg University, Switzerland) Joseph Wakeling (Fribourg University, Switzerland) Yi-Cheng Zhang (Fribourg University, Switzerland)
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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.
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Paper provided by EconWPA in its series Experimental with number
0402004.
Find related papers by JEL classification: G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
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