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Information Cascades: Evidence from a Field Experiment with Financial Market Professionals

By n.n.

Abstract

Previous empirical studies of information cascades have used either naturally occurring data or laboratory experiments. In this paper, we combine attractive elements from each of these lines of empirical research by observing market professionals from the Chicago Board of Trade (CBOT) in a controlled environment. Our analysis of over 1500 individual decisions suggests that CBOT market professionals behave quite differently than a control group of students. For instance, market professionals are better able to discern the quality of public signals and their decisions are not affected by the domain of earnings. These results have interesting implications for market efficiency and are important in both a positive and normative sense

Topics: Herd Behavior, Futures Traders, Experiments Acknowledgements, Thanks to the Editor, Robert Stambaugh, an Associate Editor, and an
Year: 2012
OAI identifier: oai:CiteSeerX.psu:10.1.1.225.4365
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