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We study herd behavior in a laboratory financial market with financial market professionals. We compare two treatments, one in which the price adjusts to the order flow so that herding should never occur, and one in which event uncertainty makes herding possible. In the first treatment, subjects herd seldom, in accordance with both the theory and previous experimental evidence on student subjects. A proportion of subjects, however, engage in contrarianism, something not accounted for by the theory. In the second treatment, the proportion of herding decisions increases, but not as much as theory suggests; moreover, contrarianism disappears altogether.
Data analysis;Capital markets;Economic models;Price controls;Herding, Contrarianism, Financial Market Professionals, trade imbalance, financial markets, probability, predictions, experimental design,, Herding, Contrarianism, Financial Market Professionals, jel: jel:C92, jel: jel:G14, jel: jel:D82
Data analysis;Capital markets;Economic models;Price controls;Herding, Contrarianism, Financial Market Professionals, trade imbalance, financial markets, probability, predictions, experimental design,, Herding, Contrarianism, Financial Market Professionals, jel: jel:C92, jel: jel:G14, jel: jel:D82
citations This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically). | 88 | |
popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network. | Top 10% | |
influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically). | Top 10% | |
impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network. | Top 10% |