Financial bubbles cause misallocation of resources and even systemic crises. Experimental finance has long studied both the determinants of bubbles and institutional measures to prevent them. Within the framework of the dual-process theory, we experimentally investigate whether traders under higher time pressure (Fast condition) behave differently than traders under lower time pressure (Slow condition). Relative to the Fast condition, the Slow condition dampens market price volatility, dramatically reduces the spread between ask and bid limit orders, and leads to higher equality in payoffs.

Trading fast and slow: The role of deliberation in experimental financial markets / Ferri, G.; Ploner, M.; Rizzolli, M.. - In: JOURNAL OF BEHAVIORAL AND EXPERIMENTAL FINANCE. - ISSN 2214-6350. - 32:(2021), p. 100593. [10.1016/j.jbef.2021.100593]

Trading fast and slow: The role of deliberation in experimental financial markets

Ploner M.;
2021-01-01

Abstract

Financial bubbles cause misallocation of resources and even systemic crises. Experimental finance has long studied both the determinants of bubbles and institutional measures to prevent them. Within the framework of the dual-process theory, we experimentally investigate whether traders under higher time pressure (Fast condition) behave differently than traders under lower time pressure (Slow condition). Relative to the Fast condition, the Slow condition dampens market price volatility, dramatically reduces the spread between ask and bid limit orders, and leads to higher equality in payoffs.
2021
Ferri, G.; Ploner, M.; Rizzolli, M.
Trading fast and slow: The role of deliberation in experimental financial markets / Ferri, G.; Ploner, M.; Rizzolli, M.. - In: JOURNAL OF BEHAVIORAL AND EXPERIMENTAL FINANCE. - ISSN 2214-6350. - 32:(2021), p. 100593. [10.1016/j.jbef.2021.100593]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11572/327143
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