Adaptive expectations versus rational expectations: Evidence from the lab

The aim of the present work is to shed light on the extensive debate about expectations in financial markets. We analyze the behaviors of subjects in an experimental environment in which it is possible to observe expectations directly, since the sole task of each player is to predict the future price of an asset. We investigate the mechanism of expectation formation in two different contexts: first, where the fundamental value is constant; second, where the fundamental price increases over repetitions. First of all, we look at whether there is a convergence to the rational equilibrium even if agents have adaptive expectations, according to the main results of Palestrini and Gallegati (2015). Moreover, we concentrate on the accuracy of aggregate forecasts compared with individual forecasts. We find that there is collective rationality instead of individual rationality. In the context of an increasing fundamental value, contrary to theoretical predictions, players are able to capture the trend, but underestimate that value. This implies that there is no full convergence to the rational expectations equilibrium if all agents make their forecasts according to an adaptive scheme

Incidental emotions and risk-taking: An experimental analysis

In this paper we run a laboratory experiment in order to investigate the impact of incidental emotions on individual risk-taking. In particular, we induce sadness and happiness by means of audiovisual stimuli and compare the subsequent risky choices with the baseline thanks to a between-subjects design. A tweaked version of the Multiple Price List method is used to elicit individual risk preferences in the context of three different lotteries. As main result, the experimental subjects exhibit greater risk aversion under sadness or happiness, than under neutral conditions. Therefore, we explain the fndings through the theory of ego depletion, whereby controlling emotions so as to subsequently process information consumes a limited self-regulatory resource, which is necessary to take risks as well. The outcome is detected in the first lottery but not from the second lottery onwards, probably due to unchecked order effect

Incidental emotions and risk-taking: An experimental analysis

In this paper we run a laboratory experiment in order to investigate the impact of incidental emotions on individual risk-taking. In particular, we induce sadness and happiness by means of audiovisual stimuli and compare the subsequent risky choices with the baseline thanks to a between-subjects design. A tweaked version of the Multiple Price List method is used to elicit individual risk preferences in the context of three different lotteries. As main result, the experimental subjects exhibit greater risk aversion under sadness or happiness, than under neutral conditions. Therefore, we explain the fndings through the theory of ego depletion, whereby controlling emotions so as to subsequently process information consumes a limited self-regulatory resource, which is necessary to take risks as well. The outcome is detected in the first lottery but not from the second lottery onwards, probably due to unchecked order effect

Incidental emotions and risk-taking: An experimental analysis

In this paper we test in a controlled environment the impact of incidental emotions induced through musical stimuli on individual risk-taking behavior. A modified version of the Multiple Price List method is used to elicit risk preference. We find that both positive and negative stimuli make experimental subjects more risk averse than subjects in the neutral treatment. This result is obtained with respect to the first lottery, while the impact of music on risk-taking is not statistically significant in the subsequent lottery, meaning that its effect vanishes as time elapses

Heterogeneous Adaptive Expectations and Coordination in a Learning-to-Forecast Experiment

The present work analyzes the individual behavior in an experimental asset market in which the only task of each player is to predict the future price of an asset. To form their expectations, players see the past realization of the asset price in the market and the current information about the mean dividend and the interest rate. We investigate the mechanism of expectation formation in two different contexts: one with a constant fundamental value, and one in which the fundamental price increases over repetitions. Results show that there is heterogeneity both within and between Treatments. Considering an increasing fundamental value has no impact on the individual expectations but it increases the volatility of the market price. We investigate in depth the reasons behind the observed heterogeneity between groups in the same treatment and results show that the heterogeneity of players' expectations is the main cause of the heterogeneity in the realized price. Looking at the coordination, we find out that homogeneous expectations is not a sufficient condition to have high degree of coordination. We analyze the individual forecasting errors as a determinant of the coordination within group and results show that a positive and significant correlation between individual errors strongly influence the level of coordination

Heterogeneous Adaptive Expectations and Coordination in a Learning-to-Forecast Experiment

The present work analyzes the individual behavior in an experimental asset market in which the only task of each player is to predict the future price of an asset. To form their expectations, players see the past realization of the asset price in the market and the current information about the mean dividend and the interest rate. We investigate the mechanism of expectation formation in two different contexts: one with a constant fundamental value, and one in which the fundamental price increases over repetitions. Results show that there is heterogeneity both within and between Treatments. Considering an increasing fundamental value has no impact on the individual expectations but it increases the volatility of the market price. We investigate in depth the reasons behind the observed heterogeneity between groups in the same treatment and results show that the heterogeneity of players' expectations is the main cause of the heterogeneity in the realized price. Looking at the coordination, we find out that homogeneous expectations is not a sufficient condition to have high degree of coordination. We analyze the individual forecasting errors as a determinant of the coordination within group and results show that a positive and significant correlation between individual errors strongly influence the level of coordination

Economic rationale behind differences in the composition of seemingly identical branded food products in the Single Market

This report presents the results of a review of the economic literature about the problem of Difference in Composition of Seemingly Identical Branded Product (DC-SIP). The problem is also referred to as dual quality. Academic literature about DC-SIP is almost non-existent. Consequently, this report focuses on contributions that are indirectly related to the topic and yet are able to foster an understanding of the economic principles of DC-SIP. The report provides a conceptual analysis in order to explain the rationale for brand owners to use DC-SIP practices and policy related issues; it does not bring empirical evidence as it is not available in the literature.JRC.D.4-Economics of Agricultur

From Coaching to Neurocoaching: A Neuroscientific Approach during a Coaching Session to Assess the Relational Dynamics between Coach and Coachee-A Pilot Study.

Life transitions represent moments characterized by changes that can profoundly influence individual life trajectories and subjective well-being. Recently, career coaching has become an important method of helping people expand their self-awareness, facilitate personal development, and increase their performance in the school-to-work transition. Although previous studies have confirmed that one of the most important keys to the success of a coaching program is the quality of the relationship between coach and coachee, there is a lack of knowledge regarding how to objectively measure it. In this pilot study, we adopted a neuroscientific approach to introduce objective measures of the relationship between coach and coachee through the phases of a coaching session. A sample of 14 university students and a professional coach participated in career-coaching sessions while their affective states were measured by recording brain (EEG) and physiological (Skin conductance) activity. Electroencephalographic indicators of valence, arousal, and engagement showed differences between session phases, highlighting the possibility of a neurophysiological measurement of relational dynamics. Our results provide initial evidence that neurophysiological activity can be considered a way to understand differences in the coach-coachee relationship, thereby providing information on the effectiveness of coaching interventions and facilitating a better life transition from school to work

High-Resolution Conformational Analysis of RGDechi-Derived Peptides Based on a Combination of NMR Spectroscopy and MD Simulations

The crucial role of integrin in pathological processes such as tumor progression and metastasis formation has inspired intense efforts to design novel pharmaceutical agents modulating integrin functions in order to provide new tools for potential therapies. In the past decade, we have investigated the biological proprieties of the chimeric peptide RGDechi, containing a cyclic RGD motif linked to an echistatin C-terminal fragment, able to specifically recognize αvβ3 without cross reacting with αvβ5 and αIIbβ3 integrin. Additionally, we have demonstrated using two RGDechi-derived peptides, called RGDechi1-14 and ψRGDechi, that chemical modifications introduced in the C-terminal part of the peptide alter or abolish the binding to the αvβ3 integrin. Here, to shed light on the structural and dynamical determinants involved in the integrin recognition mechanism, we investigate the effects of the chemical modifications by exploring the conformational space sampled by RGDechi1-14 and ψRGDechi using an integrated natural-abundance NMR/MD approach. Our data demonstrate that the flexibility of the RGD-containing cycle is driven by the echistatin C-terminal region of the RGDechi peptide through a coupling mechanism between the N- and C-terminal regions