Behavioural Effects and Market Dynamics in Field and Laboratory Experimental Asset Markets
A vast literature investigating behavioural underpinnings of financial bubbles and crashes relies on laboratory experiments. However, it is not yet clear how findings generated in a highly artificial environment relate to the human behaviour in the wild. It is of concern that the laboratory setting...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
MDPI AG
2020-10-01
|
| Series: | Entropy |
| Subjects: | |
| Online Access: | https://www.mdpi.com/1099-4300/22/10/1183 |
| _version_ | 1797550373735497728 |
|---|---|
| author | Sandra Andraszewicz Ke Wu Didier Sornette |
| author_facet | Sandra Andraszewicz Ke Wu Didier Sornette |
| author_sort | Sandra Andraszewicz |
| collection | DOAJ |
| description | A vast literature investigating behavioural underpinnings of financial bubbles and crashes relies on laboratory experiments. However, it is not yet clear how findings generated in a highly artificial environment relate to the human behaviour in the wild. It is of concern that the laboratory setting may create a confound variable that impacts the experimental results. To explore the similarities and differences between human behaviour in the laboratory environment and in a realistic natural setting, with the same type of participants, we translate a field study conducted by reference (Sornette, D.; et al. <i>Econ. E-J.</i><b>2020</b>, <i>14</i>, 1–53) with trading rounds each lasting six full days to a laboratory experiment lasting two hours. The laboratory experiment replicates the key findings from the field study but we observe substantial differences in the market dynamics between the two settings. The replication of the results in the two distinct settings indicates that relaxing some of the laboratory control does not corrupt the main findings, while at the same time it offers several advantages such as the possibility to increase the number of participants interacting with each other at the same time and the number of traded securities. These findings pose important insights for future experiments investigating human behaviour in complex systems. |
| first_indexed | 2024-03-10T15:28:22Z |
| format | Article |
| id | doaj.art-2a035d40b2cd42198defa85825cd850e |
| institution | Directory Open Access Journal |
| issn | 1099-4300 |
| language | English |
| last_indexed | 2024-03-10T15:28:22Z |
| publishDate | 2020-10-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Entropy |
| spelling | doaj.art-2a035d40b2cd42198defa85825cd850e2023-11-20T17:50:11ZengMDPI AGEntropy1099-43002020-10-012210118310.3390/e22101183Behavioural Effects and Market Dynamics in Field and Laboratory Experimental Asset MarketsSandra Andraszewicz0Ke Wu1Didier Sornette2Chair of Cognitive Science, Department of Humanities, Social and Political Sciences (D-GESS), ETH Zurich, 8092 Zurich, SwitzerlandInstitute of Risk Analysis, Prediction and Management (Risks-X), Academy for Advanced Interdiscplinary Studies, Southern University of Science and Technology (SUSTech), Shenzhen 518055, ChinaInstitute of Risk Analysis, Prediction and Management (Risks-X), Academy for Advanced Interdiscplinary Studies, Southern University of Science and Technology (SUSTech), Shenzhen 518055, ChinaA vast literature investigating behavioural underpinnings of financial bubbles and crashes relies on laboratory experiments. However, it is not yet clear how findings generated in a highly artificial environment relate to the human behaviour in the wild. It is of concern that the laboratory setting may create a confound variable that impacts the experimental results. To explore the similarities and differences between human behaviour in the laboratory environment and in a realistic natural setting, with the same type of participants, we translate a field study conducted by reference (Sornette, D.; et al. <i>Econ. E-J.</i><b>2020</b>, <i>14</i>, 1–53) with trading rounds each lasting six full days to a laboratory experiment lasting two hours. The laboratory experiment replicates the key findings from the field study but we observe substantial differences in the market dynamics between the two settings. The replication of the results in the two distinct settings indicates that relaxing some of the laboratory control does not corrupt the main findings, while at the same time it offers several advantages such as the possibility to increase the number of participants interacting with each other at the same time and the number of traded securities. These findings pose important insights for future experiments investigating human behaviour in complex systems.https://www.mdpi.com/1099-4300/22/10/1183experimental asset marketspsychological entropyreplicabilitylaboratory experimentsfield experimentscomplex systems |
| spellingShingle | Sandra Andraszewicz Ke Wu Didier Sornette Behavioural Effects and Market Dynamics in Field and Laboratory Experimental Asset Markets Entropy experimental asset markets psychological entropy replicability laboratory experiments field experiments complex systems |
| title | Behavioural Effects and Market Dynamics in Field and Laboratory Experimental Asset Markets |
| title_full | Behavioural Effects and Market Dynamics in Field and Laboratory Experimental Asset Markets |
| title_fullStr | Behavioural Effects and Market Dynamics in Field and Laboratory Experimental Asset Markets |
| title_full_unstemmed | Behavioural Effects and Market Dynamics in Field and Laboratory Experimental Asset Markets |
| title_short | Behavioural Effects and Market Dynamics in Field and Laboratory Experimental Asset Markets |
| title_sort | behavioural effects and market dynamics in field and laboratory experimental asset markets |
| topic | experimental asset markets psychological entropy replicability laboratory experiments field experiments complex systems |
| url | https://www.mdpi.com/1099-4300/22/10/1183 |
| work_keys_str_mv | AT sandraandraszewicz behaviouraleffectsandmarketdynamicsinfieldandlaboratoryexperimentalassetmarkets AT kewu behaviouraleffectsandmarketdynamicsinfieldandlaboratoryexperimentalassetmarkets AT didiersornette behaviouraleffectsandmarketdynamicsinfieldandlaboratoryexperimentalassetmarkets |