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Emotions in hybrid financial markets

Author

Listed:
  • Lorenzo Cominelli
  • Gianluca Rho
  • Caterina Giannetti
  • Federico Cozzi
  • Alberto Greco
  • Graziano A. Manduzio
  • Philipp Chapkovski
  • Michalis Drouvelis
  • Enzo Pasquale Scilingo

Abstract

We investigate whether human traders experience milder emotions when participating in a financial market populated by artificial agents as opposed to a market comprising solely humans. In particular, by manipulating across conditions the number of artificial players, we assess how much emotions vary along with price dynamics (i.e. the occurrence of price bubbles). Notably, to ensure robustness, we evaluate emotions using three distinct methods: self-reporting, physiological responses, and facial expressions. Results show larger bubbles and milder emotional reactions in conditions with a higher count of artificial agents. Furthermore, negative emotions indirectly contribute to the mitigation of price bubbles. Ultimately, we observe a moderate degree of consistency across emotional measurements, with self-reported data being the least consistent among them.

Suggested Citation

  • Lorenzo Cominelli & Gianluca Rho & Caterina Giannetti & Federico Cozzi & Alberto Greco & Graziano A. Manduzio & Philipp Chapkovski & Michalis Drouvelis & Enzo Pasquale Scilingo, 2024. "Emotions in hybrid financial markets," Discussion Papers 2024/311, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    • Handle: RePEc:pie:dsedps:2024/311
    Note: ISSN 2039-1854
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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