Dataset Information

Behavioural Effects and Market Dynamics in Field and Laboratory Experimental Asset Markets.

ABSTRACT: 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. Econ. E-J.2020, 14, 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.

SUBMITTER: Andraszewicz S

PROVIDER: S-EPMC7597354 | biostudies-literature | 2020 Oct

REPOSITORIES: biostudies-literature

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Behavioural Effects and Market Dynamics in Field and Laboratory Experimental Asset Markets.

Andraszewicz Sandra S Wu Ke K Sornette Didier D

Entropy (Basel, Switzerland) 20201020 10

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 setti ...[more]

PMID: 33286951

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Project description:Most societies prohibit some market transactions based on moral concerns, even when the exchanges would benefit the parties involved and would not create negative externalities. A prominent example is given by payments for human organs for transplantation, banned virtually everywhere despite long waiting lists and many deaths of patients who cannot find a donor. Recent research, however, has shown that individuals significantly increase their stated support for a regulated market for human organs when provided with information about the organ shortage and the potential beneficial effects a price mechanism. In this study we focused on payments for human organs and on another "repugnant" transaction, indoor prostitution, to address two questions: (A) Does providing general information on the welfare properties of prices and markets modify attitudes toward repugnant trades? (B) Does additional knowledge on the benefits of a price mechanism in a specific context affect attitudes toward price-based transactions in another context? By answering these questions, we can assess whether eliciting a market-oriented approach may lead to a relaxation of moral opposition to markets, and whether there is a cross-effect of information, in particular for morally controversial activities that, although different, share a reference to the "commercialization" of the human body. Relying on an online survey experiment with 5,324 U.S. residents, we found no effect of general information about market efficiency, consistent with morally controversial markets being accepted only when they are seen as a solution to a specific problem. We also found some cross-effects of information about a transaction on the acceptance of the other; however, the responses were mediated by the gender and (to a lesser extent) religiosity of the respondent--in particular, women exposed to information about legalizing prostitution reduced their stated support for regulated organ payments. We relate these findings to prior research and discuss implications for public policy.

Dataset Information

Behavioural Effects and Market Dynamics in Field and Laboratory Experimental Asset Markets.

Publications

Behavioural Effects and Market Dynamics in Field and Laboratory Experimental Asset Markets.

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