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

  • Eizo Akiyama


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

  • Nobuyuki Hanaki


    (AMSE - Aix-Marseille School of Economics - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - EHESS - École des hautes études en sciences sociales, IUF - Institut Universitaire de France - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche)

  • Ryuichiro Ishikawa


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

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.

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Paper provided by HAL in its series Working Papers with number halshs-00920413.

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Date of creation: Dec 2013
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Handle: RePEc:hal:wpaper:halshs-00920413
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