What Students Learn from Market Experiments and What They Don't

PurposeThe purpose of this paper is to investigate how social comparison and motivation to compete account for elevated risk-taking in fund management corroborated by asset market experiments when performance depends on rank-based incentives.Design/methodology/approachIn two laboratory experiments, university students (n1 = 240/n2 = 120) make choices between risky and certain outcomes of hypothetical sums of money. Both experiments investigate in which direction risky choices in an individual condition (individual risk preference) are shifted when participants compare their performance to another participant's performance (social comparison), being instructed or not to outperform the other (incentive to compete).FindingsIn the absence of incentives to compete, participants tend to minimize the differences between expected outcomes to themselves and to the other, but when provided with incentives to compete, they tend to maximize these differences. An independent additional increase in risk-taking is observed when participants are provided with incentives to compete.Originality/valueOriginal findings include that social comparison does not evoke motivation to compete unless incentives are offered and that increases in risk-taking depend both on what the other chooses and the incentives.

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Credit Solicitations as Market Experiments in the U.S. Credit Card Industry

Kellogg School of Management Cases ◽

10.1108/case.kellogg.2016.000083 ◽

2017 ◽

pp. 1-5

Author(s):

Nabil Al-Najjar ◽

David Besanko ◽

Roberto Uchoa

Keyword(s):

Interest Rates ◽

Selection Bias ◽

Credit Card ◽

Risk Profile ◽

Average Risk ◽

Credit Reporting ◽

Credit Score ◽

Typical Experiment ◽

Market Experiments ◽

The U.S

Describes market experiments conducted by a major credit card issuer. In a typical experiment, the issuer sends out hundreds of thousands of solicitations based on information received from credit reporting agencies (e.g., credit score, past delinquencies, etc.). Selection bias is striking: the average risk profile of those responding to higher interest rates is significantly worse than that of respondents to lower rates. Tracking respondents for 27 months after the experiment, respondents to higher rates displayed significantly higher delinquency and bankruptcy rates. Based on a research paper by Larry Ausubel.

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Prediction of Stock Trend Based on Deep Belief Networks

Applied Mechanics and Materials ◽

10.4028/www.scientific.net/amm.644-650.5538 ◽

2014 ◽

Vol 644-650 ◽

pp. 5538-5541 ◽

Cited By ~ 1

Author(s):

Zhao Yang Xu ◽

Li Na Tang ◽

Chun Peng Tian

Keyword(s):

Stock Market ◽

System Performance ◽

Stock Price ◽

High Dimensional ◽

Belief Networks ◽

Deep Belief Networks ◽

Softmax Regression ◽

The Past ◽

Market Experiments ◽

Novel Model

The deep belief networks (DBNs) are introduced to predict the stock trend. By stacking three RBMs and a softmax regression, a novel model of the stock price is developed to extract the high dimensional feature and predict the trend of the stock market. Experiments on Yahoo stock market of the past three years are implemented, and the performance of the multilayer perceptron (MLP) and DBN with different input dimensions are compared. A detailed discussion is given on the improvement of the system performance.

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Ethics and Advances in Economic Science

The Oxford Handbook of Professional Economic Ethics ◽

10.1093/oxfordhb/9780199766635.013.014 ◽

2014 ◽

pp. 296-316

Author(s):

Jingnan Chen ◽

Angelina Christie ◽

Daniel Houser

Keyword(s):

Experimental Methods ◽

Design Analysis ◽

Ethical Standard ◽

Economic Science ◽

Economic Experiments ◽

Remarkable Increase ◽

Official Policy ◽

Economics Journals ◽

Market Experiments

We argue the remarkable increase in the use of experimental methods in economics, and the consequent advances in economic science, rely on two key norms that guide the design, analysis, and reporting of economic experiments in the lab and field. We identify these two key norms as simplicity and availability of data and procedures, which both help to ensure adherence to the ethical standard of transparency. We review many prominent experimental contributions to economic science in personal exchange and market experiments, tracing the connection between the simplicity of design and subsequent developments that advance our knowledge. The norm of availability of data and procedures has been standardized as an official policy by leading academic economics journals. In conclusion, we stress the connection between a scholar’s reputation and the degree to which her results can be replicated by others.

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Effects of Ambiguity in Market Experiments

Management Science ◽

10.1287/mnsc.39.5.602 ◽

1993 ◽

Vol 39 (5) ◽

pp. 602-615 ◽

Cited By ~ 111

Author(s):

Rakesh K. Sarin ◽

Martin Weber

Keyword(s):

Market Experiments

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