When herding and contrarianism foster market efficiency: a financial trading experiment

While herding has long been suspected to play a role in financial market booms and busts, theoretical analyses have struggled to identify conclusive causes for the effect. Recent theoretical work shows that informational herding is possible in a market with efficient asset prices if information is bi-polar, and contrarianism is possible with single-polar information. We present an experimental test for the validity of this theory, contrasting with all existing experiments where rational herding was theoretically impossible and subsequently not observed. Overall we observe that subjects generally behave according to theoretical predictions, yet the fit is lower for types who have the theoretical potential to herd. While herding is often not observed when predicted by theory, herding (sometimes irrational) does occur. Irrational contrarianism in particular leads observed prices to substantially differ from the efficient benchmark. Alternative models of behavior, such as risk aversion, loss aversion or error correction, either perform quite poorly or add little to our understanding

Herding and Contrarian Behavior in Financial Markets: An Experimental Analysis

We are the first paper to analyse and confirm the existence and extent of rational informational herding and rational informational contrarianism in a financial market experiment, and to compare and contrast these with the equivalent irrational phenomena. In our study, subjects generally behaved according to benchmark rationality. Moreover, traders who should herd or be contrarian in theory are the significant source of both. Behavioural modifications or allowing risk aversion add little to performance and insight. JEL Classification: C91, D82, G14

What are Current Best Approaches Companies are Using for Performance Management for Wage Employees?

Academic journals mainly focus on performance management for white-collar employees and lack resources on best practices for wage employees. In response, we have consulted with two renowned professors at the ILR School for advice and also interviewed an HR manager at GE Aviation to find out how leading firms manage performance of hourly-wage workers in practice by probing into three major components of how they 1) approach goal-setting, 2) manage the performance evaluation process, and 3) align performance results with other HR programs

The Seiberg-Witten Kahler Potential as a Two-Sphere Partition Function

Recently it has been shown that the two-sphere partition function of a gauged linear sigma model of a Calabi-Yau manifold yields the exact quantum Kahler potential of the Kahler moduli space of that manifold. Since four-dimensional N=2 gauge theories can be engineered by non-compact Calabi-Yau threefolds, this implies that it is possible to obtain exact gauge theory Kahler potentials from two-sphere partition functions. In this paper, we demonstrate that the Seiberg-Witten Kahler potential can indeed be obtained as a two-sphere partition function. To be precise, we extract the quantum Kahler metric of 4D N=2 SU(2) Super-Yang-Mills theory by taking the field theory limit of the Kahler parameters of the O(-2,-2) bundle over P1 x P1. We expect this method of computing the Kahler potential to generalize to other four-dimensional N=2 gauge theories that can be geometrically engineered by toric Calabi-Yau threefolds.Comment: 12 pages + appendix; v2: minor corrections, reference adde

Which Organizations are Best in Class in Managing Diversity and Inclusion, and What Does their Path of Success Look Like?

Question: Which organizations are best in class in managing diversity and inclusion, and what does their path of success look like? What are the criteria to measure ‘best in class’

Helping students connect: architecting learning spaces for experiential and transactional reflection

Given the complex and varied contexts that inform students’ consciousness and occasion their learning, learning spaces are more than physical and virtual spaces. Learning spaces are also a range of situations sedimented in our continuum of experiences that shape our philosophical orientations. As such, this article, written from the perspectives of two faculty members in an English department at a four-year public university, describes our efforts to do the following. First, to draw upon models of instructional design we have experienced in our own educational backgrounds; and equally importantly, to develop learning spaces that support learning that is continuous, situated, and personal. Specifically, we critique the ways in which learning has been segregated from the rest of our life contexts for us throughout our educational histories. The irony is that this de-segregation has motivated us to create diverse learning spaces that provide our students with a more realistic set of tools and techniques for integrative life-long learning

Herding and Contrarianism in a Financial Trading Experiment with Endogenous Timing

We undertook the first market trading experiments that allowed heterogeneously informed subjects to trade in endogenous time, collecting over 2000 observed trades. Subjects’ decisions were generally in line with the predictions of exogenous-time financial herding theory when that theory is adjusted to allow rational informational herding and contrarianism. While herding and contrarianism did not arise as frequently as predicted by theory, such behavior occurs in a significantly more pronounced manner than in comparable studies with exogenous timing. Types with extreme information traded earliest. Of those with more moderate information, those with signals conducive to contrarianism traded earlier than those with information conducive to herding.Herding, Contrarianism, Endogenous-time, Informational Efficiency, Experiments

When Herding and Contrarianism Foster Market Efficiency: A Financial Trading Experiment

While herding has long been suspected to play a role in financial market booms and busts, theoretical analyses have struggled to identify conclusive causes for the effect. Recent theoretical work shows that informational herding is possible in a market with efficient asset prices if information is bi-polar, and contrarianism is possible with single-polar information. We present an experimental test for the validity of this theory, contrasting with all existing experiments where rational herding was theoretically impossible and subsequently not observed. Overall we observe that subjects generally behave according to theoretical predictions, yet the fit is lower for types who have the theoretical potential to herd. While herding is often not observed when predicted by theory, herding (sometimes irrational) does occur. Irrational contrarianism in particular leads observed prices to substantially differ from the efficient benchmark. Alternative models of behavior, such as risk aversion, loss aversion or error correction, either perform quite poorly or add little to our understanding.Herding,Informational Efficiency, Experiments.