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Cipriani, Marco.

Herd Behavior in Financial Markets An Experiment with Financial Market Professionals / Marco Cipriani. [electronic resource] : Marco Cipriani. - Washington, D.C. : International Monetary Fund, 2008. - 1 online resource (28 p.) - IMF Working Papers; Working Paper ; No. 08/141 . - IMF Working Papers; Working Paper ; No. 08/141 .

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.

ISBN: 1451869991 : 18.00 USD

ISSN: 1018-5941

Standard No.: 10.5089/9781451869996.001 doi

Subjects--Topical Terms:
Contrarianism
Experimental Design
Financial Market Professionals
Financial Markets
Herding
Predictions