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How Do Experienced Traders Respond to Inflows of Inexperienced Traders? An Experimental Analysis

Author

Listed:
  • Eizo Akiyama

    (Faculty of Engineering, Information and Systems [Tsukuba] - Université de Tsukuba = University of Tsukuba)

  • Nobuyuki Hanaki

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, IUF - Institut universitaire de France - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche)

  • Ryuichiro Ishikawa

    (Faculty of Engineering, Information and Systems [Tsukuba] - Université de Tsukuba = University of Tsukuba)

Abstract

We conducted asset market experiments where one experienced subject (EH) interacts with five inexperienced subjects (1EH5H) to investigate how EHs change their price forecasts and trading strategies when faced with strategic uncertainty caused by inflows of inexperienced subjects. Only half the EHs initially forecasted prices deviating more from the fundamental values in 1EH5H than in the final round of the experiment in which they had previously participated. Furthermore, the majority of our EHs did not change their trading behaviour. Many EHs act as price stabilisers when the inflow of inexperienced subjects is not associated with other changes in market conditions.

Suggested Citation

  • Eizo Akiyama & Nobuyuki Hanaki & Ryuichiro Ishikawa, 2013. "How Do Experienced Traders Respond to Inflows of Inexperienced Traders? An Experimental Analysis," Working Papers halshs-00920413, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00920413
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00920413
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    References listed on IDEAS

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    More about this item

    Keywords

    experience; heterogeneity; experiment; asset markets; strategic uncertainty;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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