Experimental Finance

Bloomfield, Robert J.; Anderson, Alyssa A.

doi:10.1002/9781118258415.ch7

Cited by 32 publications

(21 citation statements)

References 34 publications

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“…In this case, there would only be a need to use one of these tests. 47 A profile plot graphs the means of the response variable for each of the factor/level combinations or treatments. For example, this paper's second hypothesis consists of two factors (i.e.…”

Section: Resultsmentioning

confidence: 99%

“…Notwithstanding the importance of adequate training, financial experiments must offer participants monetary incentives. The fundamental method of experimental economics is to create a setting that implements some institutional features of interest and then provide participants with incentives to maximize utility within that setting [47]. To create these incentives, I adopt the reward structure in [39].…”

Section: Subjects Training and Incentivesmentioning

confidence: 99%

“…47 Then, I test for any relevant simple effects. Similar to main effects, if a given simple effect is significant, I provide contrast tests and/or multiple comparison tests.…”

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confidence: 99%

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Market Making, Liquidity Provision, and Attention Constraints: An Experimental Study

Cabrera¹

2017

TEL

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This paper uses an experimental electronic market to investigate the effect of limited attention on the market maker's ability to provide liquidity and, thus, on aggregate market liquidity. I find that higher demands on the market maker's attention worsen her ability to provide liquidity but do not reduce the aggregate level of market liquidity. This effect is only significant in less active markets. Furthermore, the aggregate level of market liquidity remains unaltered across both highly active and inactive markets, suggesting a reactive strategy by informed traders who step in to compete with market makers during high information intensity periods when their attention allocation efforts are compromised. In fact, in markets with a higher information value, the effect of attention constraints on the liquidity provision ability of market makers is greater. This implies that informed traders may not only exploit their informational advantage against uninformed traders but they may also use it to reap a higher share of liquidity-based profits. Finally, the market maker's trading performance measured by her profit share and ability to manage her inventory worsens when demands on her attention are greater.

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Section: Resultsmentioning

confidence: 99%

Section: Subjects Training and Incentivesmentioning

confidence: 99%

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Market Making, Liquidity Provision, and Attention Constraints: An Experimental Study

Cabrera¹

2017

TEL

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“…Moreover, experimental finance has its own journal, the Journal of Behavioral and Experimental Finance. Computational economics (including computational financial economics) is also a well know active field (Amman et al, 1996;Bloomfield, 2010;Miranda & Fackler, 2002) with its own journals like the Computational Economics (the journal of the Society for Computational Economics) or the Journal of Economic Dynamics and Control. However, by making wrongfully comparisons between two different conceptual levels, many econophysicists fuel the misunderstanding: indeed, it is very common for econophysicists to compare the results of their statistical models with the theoretical framework of financial economics (efficient market hypothesis).…”

Section: Iii) Comparing Apples With Pearsmentioning

confidence: 99%

On the “usual” misunderstandings between econophysics and finance: Some clarifications on modelling approaches and efficient market hypothesis

Ausloos

Jovanovic

Schınckus

2016

International Review of Financial Analysis

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In line with the recent research and debates about econophysics and financial economics, this article discusses on usual misunderstandings between the two disciplines in terms of modelling and basic hypotheses. In the literature devoted to econophysics, the methodology used by financial economists is frequently considered as a top-down approach (starting from a priori "first principles") while econophysicists rather present themselves as scholars working with a (empirical data prone) bottom-up approach. Although this dualist perspective is very common in the econophysics literature, this paper claims that the distinction is very confusing and does not permit to reveal the essence of the differences between finance and econophysics. The distinction between these two fields is mainly investigated here through the lens of the Efficient Market Hypothesis in order to show that, in substance, econophysics and financial economics tend to have a similar approach implying that the misunderstanding between these two fields at the modelling level can therefore be overstepped.JEL classification: G1, B4, B5

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“…This results in the situation where any interpretation of the results may not be convincing as it does not take into account the various other variables that have changed. It is important to note that the traditional data analysis has various issues including omitted-variables biases, self-selection biases, unobservable independent variables, and some unobservable dependent variables (Bloomfield & Anderson, 2010). However, the properly designed experiments are able to avoid several problems (Bloomfield & Anderson, 2010 dependent variable.…”

Section: Advantages Of the Experimental Financementioning

confidence: 99%

Technical Overview of the Concepts of Finance Studies and the Methodology of Optimizing the Financial Resources of a Firm

Chopra¹

2018

IJAFS

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Experimental Finance

Cited by 32 publications

References 34 publications

Market Making, Liquidity Provision, and Attention Constraints: An Experimental Study

Market Making, Liquidity Provision, and Attention Constraints: An Experimental Study

On the “usual” misunderstandings between econophysics and finance: Some clarifications on modelling approaches and efficient market hypothesis

Technical Overview of the Concepts of Finance Studies and the Methodology of Optimizing the Financial Resources of a Firm

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