Cognitive Imprecision and Strategic Behavior DOI
Cary Frydman, Salvatore Nunnari

SSRN Electronic Journal, Journal Year: 2021, Volume and Issue: unknown

Published: Jan. 1, 2021

We propose and experimentally test a theory of strategic behavior in which players are cognitively imprecise perceive fundamental parameter with noise. focus on 2 x coordination games, generate multiple equilibria when perception is precise. When adding small amount cognitive imprecision to the model, we obtain unique equilibrium where use simple cutoff strategy. The model further predicts that context-dependent: implement strategy noise, noise decreases volatility. Our experimental data strongly support this novel prediction reject several alternative game-theoretic models do not predict context-dependence. also find subjects aware other players' imprecision, key generating uncertainty. framework has important implications for literature global games and, more broadly, illuminates role both random context-dependent games.

Language: Английский

Associative memory, beliefs and market interactions DOI Creative Commons
Benjamin Enke,

Frederik Schwerter,

Florian Zimmermann

et al.

Journal of Financial Economics, Journal Year: 2024, Volume and Issue: 157, P. 103853 - 103853

Published: May 7, 2024

Recent theories and narratives highlight the potential role of associative recall in driving overreaction expectations market behavior. Based on a simple model, we test this idea through series experiments which news are communicated with memorable contexts. Because experimental participants predominantly remember those past that get cued by new information, their beliefs about fundamentals strongly overreact. In betting experiment, translates into prices, makes realized prices too extreme. Our results importance memory for financial decisions.

Language: Английский

Citations

18
The moral preferences of investors: Experimental evidence DOI
Jean‐François Bonnefon, Augustin Landier,

Parinitha Sastry

et al.

Journal of Financial Economics, Journal Year: 2024, Volume and Issue: 163, P. 103955 - 103955

Published: Nov. 1, 2024

Language: Английский

Citations

12
Beliefs about the Stock Market and Investment Choices: Evidence from a Survey and a Field Experiment DOI
Christine Laudenbach,

Annika Weber,

Rüdiger Weber

et al.

Review of Financial Studies, Journal Year: 2024, Volume and Issue: unknown

Published: Oct. 9, 2024

Abstract We survey retail investors at an online bank to study how beliefs about the autocorrelation of aggregate stock returns shape investment decisions measured in administrative account data. Individuals’ exhibit substantial heterogeneity and predict trading responses market movements. inform half our respondents that, historically, was close zero, which causes them update their perceived current return expectations. The treatment shifts respondents’ equity purchases during COVID-19 crash months later direction implied by intervention. Our results provide causal evidence drivers disagreement trade asset markets.

Language: Английский

Citations

4
Stubborn by Design: Neurobiological Foundation for Maladaptive Risk-Taking in Downturns  DOI
Élise Payzan-LeNestour, Yunshen Yang,

Samuel Thelaus

et al.

SSRN Electronic Journal, Journal Year: 2025, Volume and Issue: unknown

Published: Jan. 1, 2025

Language: Английский

Citations

0
Mandates and Portfolio Inelasticity DOI

Shyam Mehta

Published: Jan. 1, 2025

Language: Английский

Citations

0
Overnight vs. Intraday Returns: Investor Disagreement, Information Uncertainty, and Future Stock Returns DOI
Richard Harris, Nan Li, Nicholas Taylor

et al.

Published: Jan. 1, 2025

Language: Английский

Citations

0
Predicting Asset Return Shifts: Experimental Evidence on Human Forecasting Ability DOI
Yunshen Yang, Élise Payzan-LeNestour, Qihe Tang

et al.

Published: Jan. 1, 2024

Language: Английский

Citations

0
Cognitive Imprecision and Strategic Behavior DOI
Cary Frydman, Salvatore Nunnari

SSRN Electronic Journal, Journal Year: 2021, Volume and Issue: unknown

Published: Jan. 1, 2021

We propose and experimentally test a theory of strategic behavior in which players are cognitively imprecise perceive fundamental parameter with noise. focus on 2 x coordination games, generate multiple equilibria when perception is precise. When adding small amount cognitive imprecision to the model, we obtain unique equilibrium where use simple cutoff strategy. The model further predicts that context-dependent: implement strategy noise, noise decreases volatility. Our experimental data strongly support this novel prediction reject several alternative game-theoretic models do not predict context-dependence. also find subjects aware other players' imprecision, key generating uncertainty. framework has important implications for literature global games and, more broadly, illuminates role both random context-dependent games.

Language: Английский

Citations

2