Chmura, T., Le, H. and Nguyen, K. orcid.org/0000-0002-5892-5917 (2022) Herding with leading traders: evidence from a laboratory social trading platform. Journal of Economic Behavior & Organization, 203. pp. 93-106. ISSN 0167-2681
Abstract
We provide novel evidence about herd behavior and its impact on asset price bubbles in an experimental financial market. We find that traders imitate quotes of those with the highest wealth increases as ranked on the leader-boards, despite that no traders possess private value-related information and that wealth increases are not due to trading skills. Most remarkably, we find that herd behavior does not produce more price bubbles and the awareness of information asymmetry leads to fewer bubbles as risk-averse traders become more cautious and do not quote prices too far from the fundamental value. We also find that participants with financial training have a lower herding tendency and markets with these participants exhibit less mispricing.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2022 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/ ) |
Keywords: | Herd behavior; Asset market; Information asymmetry; Bubbles; Leader-board; Financial training |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 04 Sep 2024 15:05 |
Last Modified: | 04 Sep 2024 15:05 |
Status: | Published |
Publisher: | Elsevier BV |
Refereed: | Yes |
Identification Number: | 10.1016/j.jebo.2022.08.035 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:216773 |