| 1. |
- Andersson, Maria, 1977, et al.
(författare)
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A Social-Psychological Perspective on Herding in Stock Markets
- 2014
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Ingår i: The Journal of Behavioral Finance. - : Informa UK Limited. - 1542-7560 .- 1542-7579. ; 15:3, s. 226-234
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Tidskriftsartikel (refereegranskat)abstract
- A social-psychological perspective conceives of herding in stock markets as informative social influence resulting from heuristic or systematic information processing. In three laboratory experiments employing undergraduates we apply this perspective to investigate factors that prevent herd influence that would lead to inaccurate predictions of stock prices. In Experiment 1 we show that an economic reward for making the same predictions as the herd increases the influence of a majority but not the influence of a minority, and that an individual economic reward for making accurate predictions reduces the influence of the majority. In Experiment 2 we show a reduced influence of a majority herd’s inaccurate predictions when requiring assessments of the accuracy of the majority herd´s predictions as compared to requiring judgments of their consistency. Experiment 3 shows that a lower volatility of stock prices reduces the influence of a majority herd´s inaccurate predictions
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| 2. |
- Andersson, Maria, 1977, et al.
(författare)
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Effects of consistency and accurate predictions of stock prices on herding in a simulated financial market.
- 2008
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Ingår i: Poster presented at the 29th annual conference of the Society for Judgment and Decision Making, Chicago, USA..
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Konferensbidrag (övrigt vetenskapligt/konstnärligt)abstract
- In a simulated financial market setting we investigate the degree to which participants in judgment tasks were influenced by other (fictitious) participants’ judgments. Two experiments examine the influence from random vs. accurate majorities (Experiment 1), random vs. accurate minorities (Experiment 2), and whether the influence was affected by instructing participants to focus on the accuracy in performance (Experiments 1 and 2). Results show that participants followed majorities irrespectively of their level of accuracy, whereas accurate minorities were more influential than random minorities. The focus instruction decreased majority influence, regardless of accuracy, but increased the influence from accurate minorities.
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| 3. |
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| 4. |
- Andersson, Maria, 1977, et al.
(författare)
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Effects of financial incentives on herding in simulated financial markets
- 2008
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Ingår i: Paper presented at the International Association for Research in Economic Psychology (IAREP), Rome, Italy..
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Konferensbidrag (refereegranskat)abstract
- Herding in financial markets refers to that investors influence each other when making investment decisions. In these experimental studies, herding leads to worse performance relative to relying on private information. Previous studies of herding have shown that majorities in general are more influential than minorities. The aim of this research was to investigate whether financial incentives impact herding with majorities and minorities under these conditions. In two experimental simulations of a financial market, participants predicted an “upmarket” or “downmarket” conditional on diagnostic information presented on each trial. In Experiment 1, participants in an individual condition only received private information, while participants in a group condition, in addition, received information about randomly generated predictions ostensibly made by three others. Economic incentives for accurate predictions were based on individual performance, and were hypothesized to counteract reliance on invalid information about the herd’s choices. As expected, performance was worse in the group condition than in the individual condition, implying that participants were influenced by the herd. In Experiment 2, the effects of financial incentives for making predictions similar to either the majority or the minority of the others were examined. We hypothesized that financially rewarding group performance may reinforce non-systematic processing, and hence enhance majority influence. Since minority influence is associated with systematic processing, we hypothesized that systematic processing in minority conditions may increase the influence of the private information, and thus improve performance. The results showed that participants followed the majority but not the minority. One explanation for the asymmetry in the effects of rewarding herding with a majority and a minority may be the notion that the tendency to conform overrides systematic processing in majority influence, whereas the reverse would be true in minority influence.
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| 5. |
- Andersson, Maria, 1977, et al.
(författare)
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Effects of stock investments of information about short versus long price series
- 2012
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Ingår i: Review of behavioral finance. - : Emerald. - 1940-5979. ; 4:2, s. 81-97
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Tidskriftsartikel (refereegranskat)abstract
- Purpose – The purpose of this paper is to investigate whether stock price predictions and investment decisions improve by exposure to increasing price series. Design/methodology/approach – The authors conducted three laboratory experiments in which undergraduates were asked to role-play being investors buying and selling stock shares. Their task was to predict an unknown closing price from an opening price and to choose the number of stocks to purchase to the opening price (risk aversion) or the closing price (risk taking). In Experiment 1 stock prices differed in volatility for increasing, decreasing or no price trend. Prices were in different conditions provided numerically for 15 trading days, for the last 10 trading days, or for the last five trading days. In Experiment 2 the price series were also visually displayed as scatter plots. In Experiment 3 the stock prices were presented for the preceding 15 days, only for each third day (five days) of the preceding 15 days, or as five prices, each aggregated for three consecutive days of the preceding 15 days. Only numerical price information was provided. Findings – The results of Experiments 1 and 2 showed that predictions were not markedly worse for shorter than longer price series. Possibly because longer price series increase information processing load, visual information had some influence to reduce prediction errors for the longer price series. The results of Experiment 3 showed that accuracy of predictions increased for less price volatility due to aggregation, whereas again there was no difference between five and 15 trading days. Purchase decisions resulted in better outcomes for the aggregated prices. Research limitations/implications – Investors´ performance in stock markets may not improve by increasing the length of evaluation intervals unless the quality of the information is also increased. The results need to be verified in actual stock markets. Practical implications – The results have bearings on the design of bonus systems. Originality/value – The paper shows how stock price predictions and buying and selling decisions depend on amount and quality of information about historical prices.
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| 6. |
- Andersson, Maria, 1977, et al.
(författare)
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Experimental Studies of Majority Influences in Financial Markets.
- 2008
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Ingår i: Paper presented at the 6th Nordic conference on group and social psychology (GRASP), Lund University, Sweden.
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Konferensbidrag (refereegranskat)abstract
- Herding in financial markets refers to that investors imitate others when making investment decisions. The aim of this research is to investigate factors that would break influences of a majority of others. In one experiment we investigate the impact of the size of a herd (majority vs. minority), accuracy of the herds’ predictions, and attentional focus. Undergraduates serving as participants are asked to predict fictitious stock prices in 50 trials, conditional on information about the current price and predictions made by five fictitious other participants. The prices and the others’ predictions are generated by random sampling. A majority of the others’ predictions is correlated (rs .95), and the predictions made by the majority are either random (uncorrelated with the price, r <.20) or accurate (correlated with the price, range of rs equal to .65 - .85). Participants are instructed to focus their attention on either accuracy or consistency of the others’ predictions. The results showed that a focus on accuracy reduced majority influence, whereas a focus on consistency had no effect. This was true both in the conditions with accurate and inaccurate majorities. An ongoing additional experiment investigates whether an accurate minority has an influence when its predictions have higher predictive validity than the price. The level of accuracy in the predictions made by the minority is either random (uncorrelated with the price, r <.20) or accurate (correlated with the price, rs .95).
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| 7. |
- Andersson, Maria, 1977, et al.
(författare)
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Hållbara bonussystem : Sustainable bonus systems
- 2011
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Ingår i: Hållbar utveckling - från risk till värde / L. G. Hassel, L.-O. Larsson & E. Nore (red.). - Malmö : Studentlitteratur. - 9789144075327 ; , s. 41-49
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Bokkapitel (övrigt vetenskapligt/konstnärligt)
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| 8. |
- Andersson, Maria, 1977, et al.
(författare)
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Social influence on predictions of simulated stock prices
- 2009
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Ingår i: Journal of Behavioral Decision Making. ; 22, s. 271-279
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Tidskriftsartikel (refereegranskat)abstract
- Herding in financial markets refers to that investors are influenced by others. This study addresses the importance of consistency for herding. It is suggested that, in financial markets perceptions of consistency are based on repeated observations over time. Consistency may then be perceived as the agreement across time between investors’ predictions. In addition, consistency may be related to variance over time in each investor’s predictions. In an experiment using a Multiple Cue Probability Learning paradigm, 96 undergraduates made multi-trial predictions of future stock prices given information about the current price and the predictions made by five fictitious others. Consistency was varied between the others' predictions (correlation) and within the others’ predictions (variance). The results showed that the predictions were significantly influenced by the others’ predictions when these were correlated. No effect of variance was observed. Hence, participants were influenced by the others when they were in agreement, regardless of whether they varied their predictions over trials or not.
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| 9. |
- Andersson, Maria, 1977, et al.
(författare)
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The effect of accuracy and focus on herding in financial predictions.
- 2008
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Ingår i: Paper presented at the 10th meeting of the European Social Cognition Network (ESCON), Volterra, Italy..
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Konferensbidrag (refereegranskat)abstract
- Herding in financial markets refers to that investors influence each other when making investment decisions. Previous studies of herding have shown that a majority is more influential than a minority. This result is in line with theories of social influence, arguing that majorities in general are more influential but consistent minorities may also exert influence. The aim of this research is to investigate what factors may impact the level of influence from minorities and majorities in financial markets, focusing on accuracy and focal attention. Experiment 1 investigates the impact of the size of the herd (majority vs. minority) and the accuracy in its predictions. Participants’ task was to predict fictitious stock prices in 50 trials, conditional on information about the current price and predictions made by five fictitious other participants. Either four (majority) or two (minority) of the others’ predictions were correlated (rs > .95), and they made either random (uncorrelated with the price trend, rs < .20) or non-random predictions (correlated with the price trend, range of rs equal to .65 to .85). The results showed that the majority exerted more influence than did the minority, more when the majority made non-random than random predictions. The correlation and accuracy of predictions thus increased the majority influence, but not the minority influence. The aim of Experiment 2 was to investigate whether the majority influence would decrease if participants were instructed to focus on the others’ performance. Conditions in which the majority made random or non-random predictions were included. After a number of trials participants were requested to state either which of the others that made accurate predictions or which of the others that made predictions that were correlated. The results showed that focus on accuracy reduced majority influence.
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| 10. |
- Gärling, Tommy, 1941, et al.
(författare)
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An experimental study of influences of performance-related payments on timing of delegated stock purchases
- 2017
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Ingår i: Journal of Behavioral Finance. - : Informa UK Limited. - 1542-7560 .- 1542-7579. ; 18:1, s. 78-85
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Tidskriftsartikel (refereegranskat)abstract
- Performance-related bonuses are important tools for investment organizations to incentivize stock traders. Yet, two experiments indicate that bonuses rewarding short-term performance may lead to worse timing of purchases. We propose that hyperbolic time discounting make participants set lower aspired purchase prices for short-term (decreasing percentage) bonuses than long-term (increasing percentage) bonuses. For this reason purchases are made earlier for decreasing than increasing percentage bonuses, earlier for decreasing than random prices, and earlier for high than low price volatility. Neither purchases at lowest price or highest bonus are attained. Hyperbolic time discounting may account for bubbles observed in experimental double-auction markets.
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