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How do experienced traders respond to inflows of inexperienced traders? An experimental analysis

Listed author(s):
  • Eizo Akiyama

    ()

    (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba)

  • Nobuyuki Hanaki

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille 2 - Université Paul Cézanne - Aix-Marseille 3 - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Ryuichiro Ishikawa

    ()

    (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba)

We conducted asset market experiments where one experienced subject interacts with five inexperienced subjects to investigate how experienced subjects change their price forecasts and trading behavior when faced with strategic uncertainty caused by inflows of inexperienced subjects. Only half the experienced subjects initially forecasted prices deviating more from the fundamental values in the market with five inexperienced subjects than in the final round of the experiment in which they had previously participated. Furthermore, the majority of our experienced subjects did not change their trading behavior. Many experienced subjects act as price stabilizers when the inflow of inexperienced subjects is not associated with other changes in market conditions.

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Paper provided by HAL in its series Post-Print with number hal-01463903.

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Date of creation: 2014
Publication status: Published in Journal of Economic Dynamics and Control, Elsevier, 2014, 45 (C), pp.1--18
Handle: RePEc:hal:journl:hal-01463903
Note: View the original document on HAL open archive server: https://hal-amu.archives-ouvertes.fr/hal-01463903
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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