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- Kirchler, Michael, 1977, et al.
(författare)
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The effect of fast and slow decisions on risk taking
- 2017
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Ingår i: Journal of Risk and Uncertainty. - : Springer Science and Business Media LLC. - 0895-5646 .- 1573-0476. ; 54:1, s. 37-59
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Tidskriftsartikel (refereegranskat)abstract
- We experimentally compare fast and slow decisions in a series of experiments on financial risk taking in three countries involving over 1700 subjects. To manipulate fast and slow decisions, subjects were randomly allocated to responding within 7 seconds (time pressure) or waiting for at least 7 or 20 seconds (time delay) before responding. To control for different effects of time pressure and time delay on measurement noise, we estimate separate parameters for noise and risk preferences within a random utility framework. We find that time pressure increases risk aversion for gains and risk taking for losses compared to time delay, implying that time pressure increases the reflection effect of Prospect Theory. The results for gains are weaker and less robust than the results for losses. We find no significant difference between time pressure and time delay for loss aversion (tested in only one of the experiments). Time delay also leads to less measurement noise than time pressure and unconstrained decisions, and appears to be an effective way of decreasing noise in experiments.
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| 2. |
- Kirchler, Michael, 1977, et al.
(författare)
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The "inflow-effect"-Trader inflow and price efficiency
- 2015
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Ingår i: European Economic Review. - : Elsevier BV. - 0014-2921. ; 77, s. 1-19
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Tidskriftsartikel (refereegranskat)abstract
- We investigate the impact of cash and trader inflow on price efficiency in multi-period experimental asset markets. Implementing eight treatments with 672 subjects, we find that (i) the joint inflow of cash and traders triggers strong overvaluation and massive price run-ups (inflow-effect). Remarkably, the effect occurs in almost all of the 30 markets with joint cash and trader inflow and is very robust. The effect even prevails in markets with complete and symmetric fundamental information. We further show that (ii) in treatments with the joint inflow of cash and traders, prices crash to fundamentals towards maturity of the asset. The analysis of traders' beliefs reveals that (iii) despite fundamental values staying constant, beliefs about fundamentals co-move with upwardly trending prices. Finally, we report a speculative motive only among the optimists in treatments where we observe the inflow-effect. (C) 2015 Elsevier BM. All rights reserved.
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