1,720,973 research outputs found
Equilibria, Stability and Asymptotic Dominance in a Speculative Market with Heterogeneous Agents
No full textReflexivity reduces pro-sociality but only among strategic subjects
Full text linkIs pro-sociality a natural impulse or the result of a self-controlled behavior? The literature is not quite univocal on the cognitive mechanisms behind this key feature of observed human behavior. We investigate this issue in a lab in the field experiment with participants selected among the general adult population in Italy. We test prosociality with a Distribution game (or three player dictator game), reflexive versus impulsive behavior with an extended version of the Cognitive Reflection Test and strategic reasoning with the guessing game. In the latter, we request to participants to provide also a motivation of the choice they made in the game. We find two important results: first, that there is a positive relationship between pro-sociality and strategic reasoning. Second, reflexivity reduces pro-sociality but only among strategic subjects. Our results support the intuitive view of pro-sociality: naive individuals that do not control their impulses behave pro-socially, while among strategic subjects the ability to suppress the pro-social impulse is achieved by those subjects making a more selfcontrolled and reflexive choice
Does Variance Matter? Expectations of Price Return and Variability in An Asset Pricing Experiment
No full textOn the role of fundamentals, private signals, and beauty contests to predict exchange rates
Full text linkThis paper proposes a model where heterogeneous agents formulate their predictions of exchange rates based on a Bayesian learning process and higher-order beliefs where fundamentals and private information are used. We exploit survey data on professional forecasts to estimate the model through a Bayesian approach. Our analysis shows that higher-order beliefs are crucial, as they improve the ability to make predictions of exchange rates due to the possible coordination among agents. Moreover, public information plays the most critical role in determining individual predictions. Although the precision of the private signal is higher than the public one, information publicly revealed does exert a disproportionate influence, and differences in the estimated signals determine the equilibrium strategy of each agent as a combination of personal beliefs and higher-order expectations
Inefficiency in survey exchange rates forecasts
Full text linkWe use survey data on five bilateral exchange rates to provide empirical evidence of the fact
that professional forecasters of foreign exchange rates behave irrationally, in the specific sense that
they respond inaccurately to available information in the market when forming their predictions.
In particular, we find systematic biases in the forecasts resulting in the overreaction of analysts
to past information contained in the exchange rate dynamics: forecasters change their prediction
more than would be rational on the basis of past realized changes. In addition, forecasters are
heterogeneous in their irrationality: low performers in previous periods show a more pronounced
overreaction effect. This can be read as an indication of perpetration of past errors and continued
inability to learn from the past. In the second part of the paper, we exploit the novel structure
of our dataset, which consists of survey data extracted from the Bloomberg platform and readily
available to anyone. This feature allows us to consider own and others’ past forecasts as part of the
information set that analysts use in making their predictions. By using past forecasts as proxies for
relevant macroeconomic variables, we find evidence that analysts fail to correctly process not only
the information contained in the spot rate past dynamics, but also the information in this broader
set. We see this as confirmation of the existence of inefficiency and heterogeneity between low and
high performers also when full information is available
A test of the Behavioral versus the Rational model of Persuasion in Financial Advertising
Full text linkWe present a test of the behavioral versus the rational model of advertising in the financial market. We analyze the Granger-causality relationship existing between Comit stock market index and advertising of financial products and services from the most important daily published financial newspaper in Italy. We run the test for both the risky and non-risky advertising, finding that the behavioral model of advertising is supported when risky financial products and services are considered, while the rational model is true for the non-risky. We ascribe this result to the dual process of reasoning: When investors evaluate the decision to buy risky financial products and services, they activate the automatic, rapid decision making process. The behavioral model of advertising copes with it and provides an advertising strategy that responds to market evolutions. When non-risky financial products and services are considered, a different mental process, requiring slow and sequential reasoning, operates, compatibly with a rational decision making process
Customer Complaining and Probability of Default in Consumer Credit
Full text linkIn many countries, Banking Authorities have adopted an Alternative Dispute Resolution (ADR) procedure to manage complaints that customers and financial intermediaries cannot solve by themselves. As a consequence, banks have had to implement complaint management systems in order to deal with customers’ demands. The growth rate of customer complaints has been increasing during the last few years. This does not seem to be only related to the quality of financial services or to lack of compliance in banking products. Another reason lies in the characteristics of the procedures themselves, which are very simple and free of charge. The paper analyzes some determinants regarding the willingness to complain. In particular, it examines whether a high customers’ probability of default leads to an increase in non-valid complaints. The paper uses a sample of approximately 1,000 customers who received a loan and made a claim against the lender. The analysis shows that customers with higher Probability of Default are more likely to make claims against Financial Institutions. Moreover, it shows that opportunistic behaviors and non-valid complaints are more likely if the customer is supported by a lawyer or other professionals and if the reason for the claim may result in a refund or damage compensation
Voluntary play increases cooperation in the presence of punishment: a lab in the field experiment
No full textProblems of cooperation have often been simplified as the choice between defection and cooperation, although in many empirical situations it is also possible to walk away from the interaction. We present the results of two lab-in-the-field experiments with a diverse pool of subjects who play optional and compulsory public goods games both with and without punishment. We find that the most important institution to foster cooperation is punishment, which is more effective in a compulsory game. In contrast to Rand and Nowak (Nat Commun 2(1):1–7, 2011), we find that loners are not responsible for anti-social punishment, which is mostly imputable to low-contributors (free-riders). Loners neither totally free-ride nor they significantly punish cooperators (or other types of players): they simply avoid all forms of participation whenever possible
Reflectivity relates differently to pro sociality in naïve and strategic subjects
Full text linkAbstract Is pro sociality a natural impulse or the result of a self-controlled behavior? We investigate this issue in a lab in the field experiment with participants from the general adult population in Italy. We find two key results: first, that there is a positive relationship between pro sociality and strategic reasoning. Second, that reflectivity relates to lower pro sociality but only among strategic subjects, indicating that the intuitive view of pro sociality is valid only among strategic individuals. Non-strategic individuals are instead intuitively selfish. We surmise that these results emerge due to a common cognitive root between strategizing and pro sociality, namely empathy
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