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Trading by professional traders: an experiment

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Authors and Corporations: Cipriani, Marco (Author), De Filippis, Roberta (Author), Guarino, Antonio (Author), Kendall, Ryan (Author)
Other Authors: De Filippis, Roberta [Author] • Guarino, Antonio [Author] • Kendall, Ryan [Author]
Type of Resource: E-Book
Language: English
published:
New York, NY Federal Reserve Bank of New York [2020]
Series: Federal Reserve Bank of New York: Staff reports ; no. 939 (August 2020)
Source: Verbunddaten SWB
Lizenzfreie Online-Ressourcen
Description
Summary: We examine how professional traders behave in two financial market experiments; we contrast professional traders' behavior to that of undergraduate students, the typical experimental subject pool. In our first experiment, both sets of participants trade an asset over multiple periods after receiving private information about its value. Second, participants play the Guessing Game. Finally, they play a novel, individual-level version of the Guessing Game and we collect data on their cognitive abilities, risk preferences, and confidence levels. We find three differences between traders and students: Traders do not generate the price bubbles observed in previous studies with student subjects; traders aggregate private information better; and traders show higher levels of strategic sophistication in the Guessing Game. Rather than reflecting differences in cognitive abilities or other individual characteristics, these results point to the impact of traders' on-the-job learning and traders’ beliefs about their peers’ strategic sophistication.
Physical Description: 1 Online-Ressource (circa 53 Seiten); Illustrationen